Friday, 29 March 2019: 3:40 PM
In recent decades India’s merchandise trade with the rest of the world has increased substantially. Using annual exports and imports data, this paper analyzes India’s comparative advantage (CA) in commodity trade with high, upper and lower middle, and low-income countries during 2003-2015. In particular, two measures of CA: Revealed Symmetric Comparative Advantage (RSCA) and Trade Balance Index (TBI), are computed. Our analysis reveals that India has CA in animal products, vegetables, food products, hides and skins, textile and clothing, and footwear with the high-income countries (HIC) throughout the sample period. It also shows CA in transport and chemical with this group of countries in recent years. Furthermore, India has CA in animal, food products, plastic and rubber, hides and skins, textile and clothing, footwear, transport with lower middle income countries (LMIC) for the entire sample period. Except for a few years, India also has CA in metals, vegetables, minerals and chemicals with the LMIC. With regards to the low income countries (LIC), India registered CA in animal, food products, plastic and rubber, textile and clothing, metals, mechanical and engineering, transport and miscellaneous items during the entire period of study. Besides, India has CA in chemical, footwear and stones and glass with LIC barring a few years. This paper finally explores the shape and dynamics of the distribution of the CA measures by employing nonparametric methods: kernel density distribution and Markov transition matrix. Results indicate that India’s CA in merchandise trade against LIC is more persistent than against other two groups of countries.