The Global Institute Russia-India-China (RIC) Conference
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The Global Institute Russia-India-China (RIC) Conference Export Diversification in India and China : A Comparative Analysis* By Rajesh Chadha Geethanjali Nataraj Anjali Tandon *Work in progress. India-China : A Brief Comparison. Per Capita Incomes (PPP): India $2600, China $5340

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The Global Institute Russia-India-China (RIC) Conference

Export Diversification in India and China : A Comparative Analysis*By Rajesh ChadhaGeethanjali Nataraj Anjali Tandon

*Work in progress


India china a brief comparison
India-China : A Brief Comparison

  • Per Capita Incomes (PPP): India $2600, China $5340

  • Economic Reforms: India (1991), China (1978)

  • Reform thrust: India (started off with import substitution strategy and gradually opened up its export sector), China (Export led growth strategy)


China s export story
China’s Export Story

  • Attracted global attention

  • Mainly due to the comparative advantage of due to labour surplus

  • Recent literature/studies have highlighted the increasing technology content of Chinese exports:Xu (2006), Rumbagh (2004)


Objectives
Objectives

  • Direction of Trade

  • Composition of Trade

  • Diversification of Trade


Segregation of chinese and indian exports
Segregation of Chinese and Indian Exports

  • ETA (Empirical Trade Analysis)

  • UNCTAD

  • NCAER

  • Scheme of segregation based on five factors:

    • Skill

    • Scale

    • Resource endowment factors

    • Technology content

    • Stage of the final product


Ncaer classification derived from eta and unctad
NCAER Classification* derived from ETA and UNCTAD

  • Product group A: Primary products (91)

  • Product group B: Natural-resource intensive products (21)

  • Product group C: Unskilled-labour intensive products (27)

  • Product group D1: Low and medium technology intensive products (35)

  • Product group D2: High technology intensive products (40)

  • Product group E1: Low and medium human-capital intensive products (33)

  • Product group E2: High human-capital intensive products (10)

  • Sectors not classified according to intensity F: (2)

  • SITC Revision 3, 3 digit ( 259 products)


ETA

NCAER

UNCTAD

A: Primary

A: Primary (91)

A: Primary

B: Natural resource intensive

B: Natural resource intensive (21)

B: Labour intensive & resource based

C: Unskilled labour intensive

C: Unskilled labour intensive (27)

D1: Low & medium technology intensive (35)

C: Low skill & technology

D: Technology intensive

D2: High technology intensive (40)

D: Medium skill & technology

E1: Low & medium human capital intensive (33)

E: Human capital intensive

E: High skill & technology

E2: High human capital intensive (10)

F: Unclassified (2)

F: Unclassified

Not classified



Trade Balance GroupWise, TE 2006

TE: Triennium Ending



Import Composition Regionwise, TE 2006

TE: Triennium Ending




China's region wise trade balance in select manufacturing sectors, TE 2006

TE: Triennium Ending


India's region wise trade balance in select manufacturing sectors, TE 2006

TE: Triennium Ending


TE: Triennium Ending sectors, TE 2006


Inferences china
Inferences: China sectors, TE 2006

  • China has relatively strong export penetration with most developed partners as comapred to India It has a trade surplus with all its major trading partners except Japan and ASEAN and with the world.

  • China continues to export more labour intensive products (C, E1 & E2) with increasingly more technology intensive exports(D1 & D2 )

  • However, even higher imports of technology intensive products, particularly from ASEAN and Japan, result in a net trade deficit of these items in China’s external trade balance.


Inferences india
Inferences: India sectors, TE 2006

  • Unlike China, India has a trade deficit with all its major trading partners including China except the USA

  • Indian exports are relatively more diversified

  • India continues to be a major exporter of primary commodities (A), though its exports of technology intensive items (D2) have enhanced.

  • Dominance of labour intensive products as a group (C, E1&E2) continues.

  • Trade with China is highly skewed.

  • Nearly 67 percent of total exports to China of primary products (A)

  • Nearly 43 per cent of total imports of high technology intensive products (D2)


Conclusions
Conclusions sectors, TE 2006

  • China exports technology intensive products on the strength of its relatively large share of their imports: Processing Trade.

  • Indian manufacturing sector needs to gear up

  • Such expansion should come through intensive expansion ( of labour intensive products) as well as extensive diversification ( of technology intensive products) of India’s manufactured sector as well as exports.

  • Intensive expansion would create numerous job opportunities for the unemployed sections of India’s rural and suburban workforce

  • Learning from China, India must make the best us of production as well as assembling opportunities in technology-intensive goods. Finally, success in expanding India’s exports would be achieved mainly through overall opening up of the economy, further liberalisation and decentralisation.


Thank you

Thank You sectors, TE 2006


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