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Changing Trade Costs between People’s Republic of China and India

Author

Listed:
  • H. Brooks, Douglas

    (Asian Development Bank)

  • Ferrarini, Benno

    (Asian Development Bank)

Abstract

This paper calculates the decline in costs involving merchandise trade between the People’s Republic of China (PRC) and India during the period 1980–2008. Drawing from the recent literature, a comprehensive measure of trade costs is derived from a theory-founded gravity model of international trade, which can be computed on the basis of observed bilateral trade flows and gross domestic product data. The analysis reveals that trade costs have declined sharply since the 1980s, accounting for a large and increasing portion of growth in total trade between the two countries. Whereas the reduction of trade costs accounted for less than one third of the increase in trade between the PRC and India during the 1980s, lower costs seem to explain about three quarters of trade expansion during the 1990s, and up to nearly 85% in 2001–2008.

Suggested Citation

  • H. Brooks, Douglas & Ferrarini, Benno, 2010. "Changing Trade Costs between People’s Republic of China and India," ADB Economics Working Paper Series 203, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0203
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    Citations

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    Cited by:

    1. Warwick McKibbin & Timo Henckel, 2010. "The Economics of Infrastructure in a Globalized World: Issues, Lessons and Future Challenges," CAMA Working Papers 2010-39, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Harinder Kohli & Ashok Sharma & Anil Sood (ed.), 2011. "Asia 2050: Realizing the Asian Century," Books, Emerging Markets Forum, edition 1, number asia2050, May.
    3. Shepherd, Ben, 2011. "Logistics costs and competitiveness: measurement and trade policy applications," MPRA Paper 38254, University Library of Munich, Germany.

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