•  
  •  
 
Bulletin of Monetary Economics and Banking

Document Type

Article

Abstract

This paper analyzes the determinants of India’s Intra-Industry Trade (IIT) with itstrading partner, Indonesia, from 1995 to 2017. We estimate India’s IIT with Indonesiausing bilateral commodity trade data at the two-digit Broad Economic Categoriesclassification code level. Our estimates of IIT demonstrate that India’s trade withIndonesia is indeed intra-industry in nature. However, no remarkable improvementsin the intensity of IIT is found. We also examine the determinants of IIT by estimatinga standard IIT equation using an autoregressive distributed lag model. Our empiricalfindings reveal that trade imbalances, disparity in the demand structure, and thehuman capital endowments among the countries reduce bilateral IIT and that foreigndirect investment and trade openness play an important role in enhancing it. This studytherefore suggests relevant policy interventions to facilitate fair trade by reducingbarriers.

First Page

511

Last Page

530

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

India

Affiliation

Centre for Economic and Social Studies Hyderabad

Share

COinS