Opportunities For Entrepreneurs: A Trade Union Between China And India

With heated debate on the benefits to business, to labour, and to governments from economic union, many nations commit their people within the European Union (EU), North American Free Trade Agreement (NAFTA), Australia and New Zealand Closer Economic Relations (CER), and other trade pacts. What if two emerging giants and neighbours, India and China, were to form an economic union? This paper undertakes a preliminary discussion of the viability of a China-India economic integration and recommends further study of the subject. Using Huang and Tu's (1994) revealed comparative advantage (RCA) as a backdrop, this paper discusses areas of possible trade creation (TC) and trade diversion (TD) that will occur should a China-India economic integration take place. The role of the government and information flow as new factors of production have been examined. After considering the history, economic growth zones, economic liberalisation programs in China and India, available resources, and regional and global trade, the paper concludes that a China-India economic integration holds the key to prosperity in the so called "Asian century". This paper suggests that such integration will be economically viable and should be studied and encouraged, both by business and government.