MAPPING THE INTRA-INDUSTRY TRADE IN SOUTH ASIAN COUNTRIES THROUGH GRUBEL-LLOYD APPROACH: A SPECIAL FOCUS ON THE VEGETABLE TRADE

Abstract

Global nations are striving for sustainable growth and enhancing the welfare of the society. In the course of development, it is observed that the international trade plays a protuberant role in achieving the above mentioned goals. The intra-industry trade is the stylized fact of the modern trade, which constitutes a considerable portion in the total volume of trade. Against this theoretical background, the present study investigates the level of intra-industry trade with respect to vegetable trade in South Asian countries such as Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. In order to execute the task, secondary data on total volume of export and import of vegetables have been collected from the Direction of Trade Statistics, published by International Monetary Fund and Commodity Trade Data, published by WITS. The study covers the period from 1988 to 2018, which is the recent data available in the above mentioned sources. The analysis of the study involves two folds: at first the specialization of trade has been computed using Helpman and Krugman's (1985) general equilibrium model and the intra-industry trade has been estimated using Grubel-Lloyd Index (1975). The result of the study revealed that both Maldives and Sri Lanka are the net importers of the vegetables as the trade specialization index is negative. At the same time, the average intra-industry trade has been decreasing over the study period in South Asian countries.