Over the last decade India’s integration in international production networks (IPNs) has deepened, with growing simultaneous export and import within product categories. This has been facilitated by India’s entry into several regional trade agreements (RTAs) and multilateral tariff and non-tariff barriers reforms. The present paper examines the patterns and determinants of aggregate bilateral intra-industry trade (IIT) between India and 25 major trading partners during 2001–2015 in a panel data framework. India’s bilateral IIT indices with select countries generally display an upward trend over the sample period. The empirical results indicate that vertical intra-industry trade (VIIT) significantly explains India’s IIT pattern with the selected countries. The analysis further concludes that trade facilitation among the trading partners may significantly enhance bilateral IIT level with respect to India’s high-income partners, while the same effect is non-significant for low-income countries. Interestingly, the preferential trade dummy is found to be non-significant, implying limited influence of the RTA partnerships on India’s aggregate bilateral IIT. The empirical results underline the need for fast-tracking the trade facilitation-related reforms.
AndersenM.A. (2003). Empirical intra-industry trade: What we know and what we need to know. Vancouver: Department of Geography, University of British Columbia.
BalassaB. (1966). Tariff reductions and trade in manufacturers among industrial countries. American Economic Review, 56(3), 466–473.
4.
BhattacharyyaR. (2005). Economic development and intra-industry tade in the Republic of Korea. Journal of Economic Integration, 20(4), 809–831.
5.
BojnecS.FertoI. (2016). Patterns and drivers of the agri-food intra-industry trade of European Union countries. International Food and Agribusiness Management Review, 19(2), 53–74.
6.
BurangeL.G.ChaddhaS.J. (2008). Growth in India’s intra-industry trade. Working Paper UDE 24/2/2008, Mumbai, Department of Economics, University of Mumbai.
7.
ChakrabortyD.ChakrabortyP. (2005). Indian exports in the post-transitory phase of WTO: Some exploratory results and future concerns. Foreign Trade Review, 40(1), 3–26.
DixitA.StiglitzJ. (1977). Monopolistic competition and optimum product diversity. American Economic Review, 67(3), 297–308.
10.
DjankovS.FreundC.PhamC. (2010). Trading on time. Review of Economics and Statistics, 92(1), 166–173.
11.
Federal Reserve Bank of St. Louis (undated). Federal Reserve Economic Database. Retrieved1September2016, from https://fred.stlouisfed.org/
12.
FlamH.HelpmanE. (1987). Vertical product differentiation and the North-South trade. American Economic Review, 77(5), 810–822.
13.
FukunagaY.IsonoI. (2013). Taking ASEAN+1 FTAs towards the RCEP: A mapping study. ERIA Discussion Paper ERIA-DP-2013-02, Jakarta, Economic Research Institute for ASEAN and East Asia.
14.
GreenawayD.MilnerC. (1983). On the measurement of intra-industry trade. Economic Journal, 93(372), 900–908.
15.
GrubelH.G. (1967). Intra-industry specialisation and the pattern of trade. Canadian Journal of Economics and Political Science, 33(3), 374–388.
16.
GrubelH.G.LloydP.J. (1975). Intra-industry trade: The theory and measurement of international trade in differentiated products. London: The Macmillan Press Limited.
ItoT.OkuboT. (2011). New Aspects of Intra-industry Trade in EU Countries. IDE Discussion Paper No. 361. Chiba: Institute of Developing Economies.
19.
KantawalaB.S. (1997). Inter and intra-industry international trade among SAARC countries: 1981–1992. Foreign Trade Review, 32(1&2), 29–72.
20.
KaurG.DhamiJ.K.SarinV. (2016). Analysis of intra-industry trade with Thailand as part of BIMSTEC: An overview. International Journal of Science Technology and Management, 5(3), 60–67.
21.
KelkarH.K.BurangeL.G. (2016). India’s vertical and horizontal intra-industry trade during post-liberalization period. In ChakrabortyD.MukherjeeJ. (Eds), Trade, investment and economic development in Asia: Empirical and policy issues. Abingdon: Routledge.
22.
KrugmanP.R. (1980). Scale economies, product differentiation, and the pattern of trade. American Economic Review, 70(5), 950–959.
23.
KumarS.AhmedS. (2014). Growth and pattern of intra-industry trade between India and Bangladesh: 1975–2010. MPRA Paper No. 61113, New Delhi, Department of Economics, Jamia Millia Islamia.
24.
KumarS.AhmedS. (2015). Gravity model by panel data approach: An empirical application with implications for South Asian countries. Foreign Trade Review, 50(4), 233–249.
25.
LancasterK. (1980). Intra-industry trade under perfect monopolistic condition. Journal of International Economics, 10(2), 151–175.
26.
LapinskaJ. (2016). Determinant factors of intra-industry trade: The case of Poland and its European Union trading partners. Quarterly Journal of Economics and Economic Policy, 11(2), 251–264.
27.
LinderS. (1961). An essay on trade and transformation. New York: Wiley.
28.
PantM.BaruaA. (1986). India’s Intra-Industry Trade: 1960–80. Discussion Paper No. 8, International Trade and Development Division, School of International Studies. New Delhi: Jawaharlal Nehru University.
29.
PuertasR.MartíL.GarciaL. (2014). Logistics performance and export competitiveness: European experience. Empirica, 41(3), 467–480.
30.
SaslavskyD.ShepherdB. (2012). Facilitating international production networks: The role of trade logistics. Policy Research Working Paper No. 6224, Washington, DC, World Bank.
31.
SinghM.L. (2014). Institutional development leading trade developments: A case study of India–ASEAN bilateral trade. Foreign Trade Review, 49(2), 177–191.
32.
SrivastavaA.MeduryY. (2011). An overview of intra-industry trade. Asia-Pacific Business Review, 7(1), 153–160.
33.
TürkcanK. (2011). Vertical intra-industry trade and product fragmentation in the auto-parts industry. Journal of Industry, Competition and Trade, 11(2), 149–186.
34.
TürkcanK.AtesA. (2010). Structure and determinants of intra-industry trade in the U.S. auto-industry. Journal of International and Global Economic Studies, 2(2), 15–46.
35.
United Nations Economic and Social Commission for Asia and the Pacific (2011). Fighting irrelevance: The role of regional trade agreements in international production networks in Asia. Asia-Pacific Research and Training Network on Trade Study, New York, UNESCAP.
36.
VeeramaniC. (1999). Intra-industry trade under economic liberalisation: The case of Indian capital goods industries. Journal of Indian School of Political Economy, 11(3), 455–473.
37.
VeeramaniC. (2001). India’s intra-industry trade under economic liberalisation: Trends and country specific factors. CDS Working Paper No. 313, Trivandrum, Centre for Development Studies.
World Trade Organization (WTO) (2011). Trade patterns and global value chains in East Asia: From trade in goods to trade in tasks. In collaboration with Institute of Developing Economies (IDE) and Japan External Trade Organization (JETRO), Geneva: WTO.
