Paper Title: INDIA’S EXPORTS TO ASEAN COUNTRIES: An Empirical Study
Author: Dr. Amal Sarkar
Institutional affiliation: Senior Lecturer, Department of Economics Narasinha Dutt College, Howrah, West Bengal, India. Mailing Address: Dr. AMAL SARKAR
39, DURGA CHARAN DOCTOR ROAD, KOLKATA, WEST BENGAL, INDIA. PIN CODE: 700 014.
Email ID: email@example.com
Telephone Number: 033 2216 2371 (INDIA)
INDIA’S EXPORTS TO ASEAN COUNTRIES: An Empirical Study
India has put an emphasis on enhancing trade relations with ASEAN countries in recent years. In the post-reform reform period, India’s export to ASEAN has significantly increased. However, the ASEAN financial crisis of late nineties had led a decline in the growth rate of export to this region. From the model, measuring price and import elasticities of export flows to ASEAN attracts a great deal of attention because of its significant implications on India's export earnings from ASEAN. As the time series data involves non-stationary on their level, the Phillips-Hansen’s Fully Modified (FM) method has been applied to get the estimated values of elasticity. The regression results show that there exist significant differences in elasticity of India’s exports across ASEAN countries.
Foreign trade plays an important role in the economic development and growth of a country. Findlay (1984) consider trade as a highway of learning and suggest that foreign ideas and creativity are an impetus to domestic creativity and growth. Following the phenomenal economic success of East Asia, it has become an article of faith that an outward oriented industrialization is superior to inward oriented industrialization as a strategy of economic development. A country can reap a lot of benefits from an export-oriented policy (James et.al.1987). Bhagwati (1984) suggests that export-oriented industrialization encourage high taking and seizing opportunities, which are basic requirements for economic development. The India is not exception to the rule. India took trade liberalization measures as an integral part of economic reform in early nineties. These reforms have led to a significant change in the performance of the external sector in the country. As a result of reform, there has been considerable increase in the degree of openness, as measured by the trade to GDP ratio, of the country. The share of trade in GDP has significantly increased from 15 per cent in 1990 to 31 per cent in 2002. India’s exports as a percentage of world exports have improved to 0.77 per cent in 2002. However, India’s share in world trade is still very low and appears unimpressive when compared with other Asian countries such as China, Korea, Malaysia, Thailand, Indonesia, Philippines and Singapore. There is, therefore, a clear need to enhance the volume of India’s trade with the rest of the world. India has put an emphasis on enhancing trade relations with ASEAN countries in recent years.
One of the powerful economic blocs in Asia is ASEAN (Association of South East Asian Nation). ASEAN nations have established AFTA (ASEAN Free Trade Area) in 1992. AFTA had initially aimed at reducing intra-regional tariffs or CEPT (common effective preferential tariff) to 0-5 per cent by 2008. Another economic bloc in Asia is SAARC (South Asian Association for Regional Cooperation). It was established in 1985 comprising seven countries of South Asia. They have formed SAPTA (SAARC Preferential Trade...
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