A Comparative Analysis of India s and China s Export Structure

Transcription

1 Iteratoal Joural of Appled Research 017; 3(3): 8-86 ISSN Prt: ISSN Ole: Impact Factor: 5. IJAR 017; 3(3): Receved: Accepted: Ndh Bagara Research Scholar, Departmet of Ecoomcs, Jama Mlla Islama, New Delh, Ida Saba Ismal Assstat Professor, Departmet of Ecoomcs, Jama Mlla Islama, New Delh, Ida A Comparatve Aalyss of Ida s ad Cha s Export Structure Ndh Bagara ad Saba Ismal Abstract Cha has acheved rapd export growth over tme sce the adopto of a ope - door polcy 1978, Ida has started opeg ts ecoomy 1980s; partcularly ew ecoomc polcy was adopted Though both the coutres shared may commo features the begg of the process of tegrato wth the world ecoomy lke followg the polces of mport substtuto ad heavy dustralzato etc., stll Ida s export growth has bee modest tha Cha s export growth. Alog wth ths Ida ad Cha are vewed at par terms of factor edowmets ad export specalzato, wth these smlartes t becomes mportat to exame how the structure of exports of two coutres dffer. The paper exame ad compare structure of exports terms of export dversfcato, composto, degree of Itra-Idustry Trade ad comparatve advatage of exports of Ida ad Cha vs-à-vs rest of the world, alog wth t the level of compettveess betwee Ida ad Cha s also measured. The study uses varous dexes to aalyze export structure of Ida ad Cha. The fdg reveals that there are several dffereces betwee Ida s ad Cha s export structure. I partcular Cha s exports s more dversfed compare to Ida s exports, but over tme dversfcato of Ida s exports s creasg. Comparg RCA of Ida ad Cha at SITC-1 dgt level whch categorze total merchadze exports te commodty groups, Ida possess comparatve advatage sx commodty groups whereas Cha eoys oly three out of whch two are commo to both the coutres as per 014 aalyss. Keywords: Exports, Cocetrato, Sophstcato, Revealed Comparatve Advatage, Compettveess, JEL Classfcato: F10, F13, F14 1. Itroducto Export plays a mport role ecoomc developmet of a coutry through provdg exteral market for domestcally produced goods, employmet geerato, earg foreg exchage ad crease GDP as a result of whch both savg ad vestmet creases. For ay developg coutry, mprovemet export performace s a key obectve. Ida ad Cha beg developg coutres, export growth occupes a place of strategc mportace the cotext of ecoomc developmet whch has lead to varous remarkable chages foreg trade polcy of these coutres. Cha bega to ope ts cetrally plaed, o-market ecoomy 1978 whereas Ida already had large prvate sector ad fuctog markets but they were subect to rgd state cotrols utl the startg of pecemeal reforms 1980s. These reforms became systematc ad far broader through ew ecoomc polcy of 1991 [1]. Fgure 1 depcts that there s a huge gap betwee exports of Ida ad Cha terms of ther share world exports ad over tme ths gap s creasg. We ted to vestgate the export structure of Ida ad Cha vs-à-vs rest of the world for the tme perod of , so that we ca come up wth the factors behd the spectacular performace of Cha relatve to Ida. Correspodece Ndh Bagara Research Scholar, Departmet of Ecoomcs, Jama Mlla Islama, New Delh, Ida ~ 8 ~

2 Iteratoal Joural of Appled Research Source: IFS database Ida followed the polcy of Import substtuto for over four decades sce depedece. Durg ths perod Ida s export performace was stagat. Despte wave of export promoto global cotext, Ida remaed a small player the world trade []. Tll late 1970s Ida s trade polcy heavly reled o quotas, mport lcesg etc. A slow ad sustaed relaxato of mport cotrols started wth the export-mport polcy of There was a shft trade polcy from mport substtuto to export promoto sce the early 1980s. The shft trade polcy took place cosderg mportace of export promoto employmet geerato, crease output, earg foreg currecy ad moblzg domestc resources etc. Sgfcat growth exports was recorded md 1980s as a result of troducto of may export cetves ad tyg mports wth exports. A maor programme of ecoomc reform ad lberalzato started 1991 wth emphass o exteral sector. Ths reform cluded reducto mport tarffs, reducg atexport bas of exsted polcy regme. Ths eabled creased tegrato of Ida ecoomy wth rest of the world [3]. I case of Cha, 1979 the coutry swtched to ope-door polcy after a decade of ward lookg polcy. After decade of ward oreted trade ad foreg vestmet polces, 1979, Cha swtched to a opedoor polcy. Sce the, coutry has gradually moved to lberalzed trade ad foreg vestmet regme. A varety of strumets were employed to promote exports lke set-up of specal ecoomc zoes (SEZs), producto etworks for exports (PNEs) ad hgher exchage reteto rghts to targeted exports etc. PNEs meas brg the leadg factores wth the targeted sectors to a etwork ad support them through subsdes for varous puts. Apart from ths lberalzato polcy also cluded lberal foreg vestmet regme ad duty exemptos.. Obectves As metoed above there s a huge gap betwee Exports of Ida ad Cha both value ad growth terms, we ted to vestgate the reasos behd the gap, our obectves are: To measure the level of dversfcato of exports of Ida ad Cha To Study the structural chage composto of exports over the study perod. Fg 1: Merchadse Exports of Ida ad Cha (I mllo Dollar) To fd out commodty groups where Ida ad cha have revealed comparatve advatage To measure trade compettveess betwee Ida ad Cha 3. Methodology 3.1 Dversfcato The extet of dversfcato or Specalzato of trade ca be measured usg Herfdahl Idex. H J = Where ( x S ) where S x x deotes Coutry s export of SITC subsdary headg (5 dgts), S s share of good coutry s exports. Where summato s take over all SITC subsdary headgs. H takes value (0, 1] rage. Hgher value mples specalzato producto of few products. 3. Revealed Comparatve Advatage Balassa dex of Revealed Comparatve Advatage (RCA) (Balassa 1989) [1] has bee used to explore the dyamcs of specalzato the exports of Ida ad Cha for the te dustral clusters classfed by SITC-1 dgt level classfcato. The dex s defed as: RCA = X X w X X w Where X = th coutry s export of commodty X w = world exports of commodty X = total exports of coutry X w = total world exports Where x ad x w deote the export of product from coutry ad the total export of Product for the whole world, ad X ad X w refer to the total exports of coutry ad the world respectvely. I ths share of a sector a coutry s total export s compared wth the share of the same sector world s total exports. If RCA s greater tha uty dcates that the coutry specalzes a product but f less tha oe t mples that the coutry has a revealed comparatve dsadvatage product. ~ 83 ~

3 Iteratoal Joural of Appled Research 3.3 Itra Idustry Trade (Grubel ad Lloyd 1975) provded the emprcal study to measure Itra Idustry Trade ad ts mportace. Ths Idex s kow as Grubel-Lloyd dex s calculated as: B ( X M X ) X M M 100 Where: B = Idex of tra-dustry trade of the th dustry. X = Export of the th dustry, M = Imports of the th dustry Itra Idustry Trade Idex rages from 0 to 100 where 0 dcates o IIT (.e. oe of (X or M) s zero) ad dex value of 100 dcate complete tra-dustry trade (both X ad M are equal). 3.4 Trade competto ad complemetartes To evaluate the trade challeges posed by Ida ad Cha to each other as well as to the rest of the world, we costruct well-kow dces coeffcet of coformty (CC), defed as follows: CC ( a a ) a ( a ) Where a ad a represet the share of good the total exports of coutres ad. If the dces s equal to 1, t dcates tese competto betwee two coutres. However whe equal to 0, t dcates totally dssmlar exportg structures betwee two coutres, whch dcates absece of competto. 4. Emprcal fdgs 4.1 Comparg Composto of Exports As per Table 1 top three product groups terms of ther share total merchadze exports of Ida are : Maufactured goods, Meral fuel/lubrcats ad Machery/trasport equpmet ad as per Table top three product groups terms of ther share total merchadze exports of Cha are: Machery/trasport equpmet, Mscellaeous maufacturg arts ad Maufactured goods. Comparg the export composto of two coutres, t ca be see that though Machery/trasport equpmet s part of top three product groups for both the coutres, ts mportace dffers, Machery/trasport equpmet form aroud 45% share of Cha s exports 014 whereas ts cotrbuto Ida s share s aroud oe thrd of t.e. 15%. It s also foud that Meral fuel/lubrcats s a maor cotrbutor to Ida s exports whereas ts cotrbuto to Cha s exports s very omal. Mscellaeous maufacturg arts s also a sgfcat cotrbutor the total exports of both the coutres but ts share s decreasg over tme for both Ida ad Cha. Comparg the structure of exports of two coutres t ca be sad that Cha s exports s maorly domated by Maufacturg Goods whereas Ida s exports s good mx of maufacturg ad atural resource based goods. Table 1: Share of Products (SITC-1 dgt) total merchadse exports of Ida. C Product group Maufactured goods Meral fuel/lubrcats Machery/trasp equpmt Mscellaeous mauf arts Chemcals/products.e.s Food & lve amals Crude mater.ex food/fuel Commodtes es Beverages ad tobacco Amal/veg ol/fat/wax Table : Share of Products (SITC-1 dgt) total merchadse exports of Cha C Product Groups Machery/trasp. equpmt Mscellaeous mauf. arts Maufactured goods Chemcals/products.e.s Food & lve amals Meral fuel/lubrcats Crude mater.ex food/fuel Beverages ad tobacco Commodtes es Amal/veg ol/fat/wax Comparg structure of Revealed Comparatve Advatage Out of te product groups at SITC-1 dgt level, Ida has comparatve advatage sx product groups whereas Cha has t oly three product groups as per 014 aalyss. Lookg at the commoalty betwee two coutres terms of comparatve advatage, Out of three product groups ~ 84 ~ whch Cha possess comparatve advatage, two are commo to both the coutres that are Mscellaeous maufactured artcles ad Maufactured goods classfed chefly by materal. But Machery ad trasport equpmet s a product group whch oly Cha possess the comparatve advatage.

4 Iteratoal Joural of Appled Research Comparg the structure of comparatve advatage 199 ad 014, t ca be see that there has bee lttle chage structure terms of comparatve advatage.e. Ida over tme has gaed comparatve advatage two goods whch t was mssg 199, that are Meral fuels, lubrcats ad related materals ad Chemcals ad related products,.e.s. rest remag same whereas Cha has gaed comparatve advatage Machery ad trasport equpmet ad lost t Food ad lve amals betwee 199 ad 014 rest remag same. 4.3 Comparg Itra-Idustry Trade Dffereces relatve prces s oe maor factor behd dffereces export growth of two coutres but may crtques have argued that the era of techology dyamsm, t s equally mportat for the coutres to follow the le ad acqure latest techologes to mata ts compettveess the global market. But followg the global techology dyamsm s a challege for developg coutres wth the gve resource costrats. Itra-dustry trade maufactures s see as a way of factor movemet as predcted by heckscher- ohl trade theory. It s foud that Itra-dustry trade s more lkely to trasfer techology from oe coutry to aother as t s more lkely to absorb ovatos emboded the foreg techology f t s used the producto ad exports of same products. Table 4: Ida's IIT for the perod of Code, Product detals ,Maufactured goods ,Chemcals/products.e.s ,Machery/trasp equpmt ,Crude mater.ex food/fuel ,Beverages ad tobacco ,Meral fuel/lubrcats ,Mscellaeous mauf arts ,Food & lve amals ,Amal/veg ol/fat/wax Table 5: Cha's IIT for the perod Code Product Groups (SITC-1 dgt) Food & lve amals Chemcals/products.e.s Beverages ad tobacco Machery/trasp equpmt Maufactured goods Mscellaeous mauf arts Meral fuel/lubrcats Amal/veg ol/fat/wax Crude mater.ex food/fuel Commodtes es I Ida Itra-Idustry trade s hgh case of maufactured goods, Chemcals/products.e.s., Machery/trasport equpmet ad Crude materal excludg food/fuel whereas Cha the Itra-Idusty trade s hgh case of Food & lve amals, Chemcals/products.e.s., Beverages ad tobacco ad Machery/trasport equpmet. 4.4 Comparg Dversfcato I recet years, the trade lterature has provded a umber of emprcal evdece to support the mportace of export dversfcato. For some developg coutres dversfcato of ther export basket has bee oe of the key trade polcy compoet to stablze the export sector growth ad subsequetly GDP growth. Fgure 3 reveal that Cha s exports s more dversfed compare to Ida s exports as t s more close to zero, that meas that Cha s exports growth s more stable compare to Ida s exports growth. Ida s HHI s decreasg over tme dcatg crease dversfcato of exports whch s a postve sg for Export growth of Ida. Fg 3: HHI for Ida ad Cha ( ) ~ 85 ~

5 Iteratoal Joural of Appled Research 4.5 Complemetarty Idex It ca be see through the Fgure 4 that the coeffcet of coformty dex was hgh 199 but over the tme t has decreased from to.1 014, gettg closer to zero. It dcates that over the tme the export structure of two coutres s becomg dssmlar. It ca also be cofrmed by lookg at composto of exports, resource based exports s a maor cotrbutor to Ida s exports wth creasg share over tme whereas case of Cha, hghtech. exports have made sgfcat cotrbuto to ts total exports wth creasg sgfcace over tme. Hece we ca say that the exports are becomg more compatble over tme rather tha becomg compettve. Fg 4: Trade competto ad complemetartes betwee Ida ad Cha (cc) 5. Cocluso The paper s a attempt to evaluate the smlartes of the patter of reveled comparatve advatage for Ida ad Cha the Global market ad t s foud that out of te product groups, there are oly two groups commo to both the coutres terms of havg comparatve advatage as per 014 aalyss. Aother mportat fdg s that, accordg to Rcarda theory of trade Coutres ted to trade o the bass of comparatve advatage but the aalyss results cotradct wth ths statemet. I case of Ida, Machery ad trasport equpmet cosst of sgfcat share of Ida s total Merchadse exports whereas Ida does t possess comparatve advatage t, ths ca be ustfed o groud of havg hgh IIT t.e. mportg the raw materal/parts of Machery ad trasport equpmet ad resellg global market after assemblg Ida. I terms of dversfcato also Cha s exports s more dversfed compared to Ida s hece export growth s more stable ature Cha tha Ida. Ida should emphasze more o the growth of producto ad exports of maufacturg goods as the competto resource based goods s stff the global market ad Ida beg a coutry wth abudace of labour, ca eoy comparatve advatage the world market of maufacturg goods wth the help cheap labour cost. It would also help reducg the problem of uemploymet the coutry. Ida ca also ga the latest techology ad ca mprove techologcal testy of exports by allowg more Foreg Drect Ivestmet the Coutry as FDI wll also brg the latest techology wth t. Lke Cha, Ida eed to further dversfy ts exports to stablze export growth.. Bhat T. Structural chages Ida s foreg trade. A study report prepared as a part of Research Programme o Structural Chages, Idustry ad Employmet the Ida Ecoomy: Macro-ecoomc Implcatos of the Emergg Patter, sposored by the Ida Coucl of Socal Scece Research (ICSSR), New Delh, Bhat TP. Ida ad Cha the Trade Polcy Dyamcs. Ida Quarterly: A Joural of Iteratoal Affars. 01; 68(1): Caglar A, Baker M. Ecoomc Chage Ida. RBA Bullet. 010, Lall S. Ida's maufactured exports: comparatve structure ad prospects. World Developmet. 1999; 7(10): Mukheree S, Mukheree S. Overvew of Ida Export Performace: Treds ad Drvers. IIM Bagalore Research Paper, 01, (363). 7. Paudel RC. Lberalsato reform ad export performace of Ida (No ). The Australa Natoal Uversty, Australa South Asa Research Cetre, Srvasa TN. Cha ad Ida: ecoomc performace, competto ad cooperato: a update. Joural of Asa Ecoomcs. 004; 15(4): Paagarya MA. Ida the 1980's ad 1990's: A Trumph of Reforms (No. 4-43). Iteratoal Moetary Fud Veerama C. Sources of Ida's Export Growth Pread Post-Reform Perods. Ecoomc ad Poltcal Weekly: Refereces 1. Balassa BA. Comparatve advatage, trade polcy ad ecoomc developmet, Harvester Wheatsheaf ~ 86 ~