Intra-Industry trade in Manufactured Goods between India and Select Southeast Asian Nations: An Empirical Examination using the G-l Index

Abstract

"Post the wave of industrialisation, a new order of world trade emerged, which could not be explained by the classical and neoclassical models of trade. Such a trade pattern came to be denoted as ‘Intra- Industry-Trade’(IIT), implying exchange of similar or identical goods and services within an industry or sector between countries. The ASEAN is India’s fourth largest trading partner, and their economic partnership has been growing exponentially. A high degree of IIT exists in India-ASEAN trade. The present study undertakes a comprehensive examination of IIT in manufactures between India and top five trade partners among ASEAN, i.e., Indonesia, Malaysia, Singapore, Thailand, and Vietnam during the period 1992-2020. As manufactures comprise of the most traded category between India-ASEAN, Intra-Industry trade is examined at technology level, wherein manufactures are classified into resource based, low, medium, and high technology manufactures, and at commodity category level, wherein IIT is examined based on major manufactured categories. The analysis reveals exponential increase in India’s IIT among manufactured goods with the select ASEAN countries from 1992 to 2020. Albeit the degree of IIT varies by country, which has been examined in detail. The study suggests the promotion of IIT between the partner countries such that the several benefits of IIT can be harnessed, such as, efficiency gains, improved competitiveness, increased productivity, and greater economic growth, which would be mutually advantageous to India and ASEAN countries."