Trade among BRICS Nations: An Examination of Growth, Structural Changes and Potential

Abstract

This paper examines pattern of structural changes and potential of trade among BRICS nations during the period 1995-2011. Pattern of structural changes in India’s major trading commodities with other nations was studied through traditionality analysis (Pineres and Ferrantino, 1997; Sethi, 2001). And the potential of Inter-BRICS trade was assessed through panel-data based general gravity modeling. As per the findings, the pattern of structural changes in India’s major commodities exports to and imports from other countries in the block was such that the most traditional items were peculiar to the country in question. As per the estimated gravity model, the intra-BRICS trade is expected to improve significantly through enhanced levels of GDP (via liberalization of trade barriers among the member nations). Population sizes of the member countries also influenced the volume of trade directly, though marginally. However, distance between the member countries induced an indirect, yet non-significant, effect on the volume of intra-block trade. Thus, growth-promoting policies, in conjunction with all-out efforts to ensure cordiality in the Indo-China relations could capitalize upon the potential of trade among BRICS nations. JEL Classification: C13, C23, F14, N70, O57.