Article Title

INTRA-INDUSTRY TRADE BETWEEN INDIA AND INDONESIA

Authors

C T VIDYA, Centre for Economic and Social Studies Hyderabad - IndiaFollow
KP Prabheesh, Indian Institute of Technology Hyderabad - IndiaFollow

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.

Recommended Citation

VIDYA, C T and Prabheesh, KP (2019) "INTRA-INDUSTRY TRADE BETWEEN INDIA AND INDONESIA," Bulletin of Monetary Economics and Banking: Vol. 21: No. 0, Article 1.
DOI: https://doi.org/10.21098/bemp.v0i0.978
Available at: https://bulletin.bmeb-bi.org/bmeb/vol21/iss0/1

First Page

511

Last Page

530