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Gains and Losses of India-China Trade Cooperation – a Gravity Model Impact Analysis

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  • Swapan K. Bhattacharya
  • Biswanath Bhattacharyay

Abstract

As revealed by the trade intensity indices, India and the People’s Republic of China have significant bilateral trade potential, which remains unexplored until now. These countries are presently negotiating for free trade arrangements among them based on their complementarities. This paper makes an attempt to estimate the likely benefits in terms of gains or losses in imports of both India and China due to different preferential trading arrangements and free trade arrangements using the gravity model. Empirical results show that in the short run India’s potential gain is relatively less compared to China because of its high tariffs but in the long run, India’s gains are higher than China once its tariff levels are brought at par with them. Free trade arrangement is a win-win situation for both countries and is consistent with their growing dominance in the international trade.

Suggested Citation

  • Swapan K. Bhattacharya & Biswanath Bhattacharyay, 2007. "Gains and Losses of India-China Trade Cooperation – a Gravity Model Impact Analysis," CESifo Working Paper Series 1970, CESifo.
    • Handle: RePEc:ces:ceswps:_1970
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    1. Baldwin, Richard, 1993. "A Domino Theory of Regionalism," CEPR Discussion Papers 857, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Bhattacharyay, Biswa Nath & Mukhopadhyay, Kakali, 2015. "A comprehensive economic partnership between India and Japan: Impact, prospects and challenges," Journal of Asian Economics, Elsevier, vol. 39(C), pages 94-107.
    2. Shinyekwa, Isaac & Othieno, Lawrence, 2013. "Comparing the Performance of Uganda’s Intra-East African Community Trade and Other Trading Blocs: A Gravity Model Analysis," Research Series 150227, Economic Policy Research Centre (EPRC).
    3. Manmohan Agarwal & Madanmohan Ghosh, 2011. "An India–China FTA," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 12(2), pages 185-220, September.
    4. Surender Kumar & Prerna Prabhakar, 2020. "Industrial energy prices and export competitiveness: evidence from India," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(1), pages 1-20, January.
    5. Ansari, S.A. & Khan, W., 2015. "India’s Agricultural Trade Potential in Post-WTO Period," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 28(Conferenc).
    6. Biswa Nath Bhattacharyay & Madhurima Bhattacharyay, 2016. "Trends and Patterns of Growth, Development, Achievements of China and India: A Comparative Analysis," CESifo Working Paper Series 5788, CESifo.
    7. Biswa Nath Bhattacharyay & Kakali Mukhopadhyay, 2013. "Economy Wide Impact of the Trade Integration between Japan and India: A Computable General Equilibrium Analysis," CESifo Working Paper Series 4557, CESifo.
    8. wani, Nassir ul & dhami, Jasdeep kaur, 2016. "Trade Potential of India against BRCS Economies: An empirical analysis based on Gravity Model," MPRA Paper 91785, University Library of Munich, Germany, revised 10 Feb 2017.
    9. Sunandan Ghosh & Manmohan Agarwal & Adrita Banerjee, 2019. "India–China Trade: Asymmetrical Developments and Future Prospects," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 20(1), pages 70-93, March.
    10. Shinyekwa, Isaac & Lawrence, Othieno, 2013. "Comparing the Performance of Uganda’s Intra-East African Community Trade and Other Trading Blocs: A Gravity Model Analysis," Research Series 159667, Economic Policy Research Centre (EPRC).
    11. Sayeeda Bano, 2014. "An Empirical Examination of Trade Relations between New Zealand and China in the Context of a Free Trade Agreement," Working Papers in Economics 14/04, University of Waikato.

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