Aggregating an economic model and GIS to explore trade potentials of India-Caspian countries and a way forward for INSTC

Abstract

The Caspian countries have a crucial role in new trade scenarios for India as it constantly steers towards its trade diversification and expansion. With the establishment and expansion of INSTC (International North South Transport Corridor), the importance of Caspian countries (Azerbaijan, Iran, Turkmenistan, Kazakhstan, and Russia) has increased. INSTC is also seen as a gateway to Central Asia. It is, therefore, of utmost significance to estimate the trade potential of the aforesaid with India adopting novel methods and techniques with giving due attention to the role of INSTC. The objective of the present study is to examine the role of INSTC in the light of geographical background and in promoting Indian trade. The study also attempts to analyze past trends of Indo-Caspian trade potential. A profound gravity model is developed to estimate India-Caspian countries' recent pattern of trade potential. Population, GDP, trade, and service area of the countries' ports are taken as influencing variables in modelling the trade potential and their statistical significance is estimated using ordinary least square method. The integration of GIS based network analysis and service area modelling is performed first time for estimating trade potential as it represents the port's connectivity to the hinterland. The findings of the gravity model postulate that recent years have been full of changes where Iran has lost its dominance, and Azerbaijan has risen to capture the top position from 2015 to 2020. Steady growth has been observed in Russia and sudden growth in Azerbaijan. The present study is a standalone in which the service area of ports has been used and has a positive relation with trade.