Dynamics of Services Exports in India

Abstract

The article examines the dynamics in specialization pattern of comparative advantage in services exports from India for the time period 2004–2013, while drawing a distinction between the pre- and the post-crisis trends. The analysis is based on a modified revealed symmetric comparative advantage index. It also employs the Galtonian regression and the Markovian transition matrices to study the distribution and intra-distribution dynamics of export patterns. The results reveal that India has a strong comparative advantage in modern services mainly business services and computer and information services. The findings suggest a stable but broadening pattern of specialization of India’s services exports. Further, the transition probabilities reveal that the chances of remaining in or switching to a state of comparative disadvantage are more pronounced than being or moving to a state of comparative advantage. Overall services exports exhibit high persistence in both the pre- and post-crisis period pointing towards a low impact of crisis on India’s services exports. JEL: C14, F14, L80