Download - Qureshi Ppt Parallel
1
Trade Dynamics of China and Trade Dynamics of China and India:India:
Challenges and OpportunitiesChallenges and OpportunitiesMahvash Saeed Qureshi
Trinity College University of Cambridge
and
Guanghua WanUnited Nations University
World Institute of Development Economics Research
The Eighth Global Development Network ConferenceBeijing, January 14-16, 2007
2
I. IntroductionII. China and India: the New Asian TigersIII. Trade Structure of China and IndiaIV. Potential Trade Competition &
Complementariy V. Dynamics of Trade CompetitionVI. Conclusions and Policy Implications
Presentation Presentation OutlineOutline
3
• China and India: emerging global economic players
• High economic growth rates• Rapidly rising share in world exports• Large inflows of foreign investment• Engines of demand growth in commodities• Positive demographics
I. IntroductionI. Introduction
• The new Asian drivers: threat or opportunity?
4
Introduction (cont.)Introduction (cont.)
• Potential Trade Impacts• ‘Complementary Effect’• ‘Competitive Effect’ in third markets• ‘Competitive Effect’ in domestic markets
• Key Factors• Similarity of export structures• Complementarity of export-import structures• Flexibility and speed of adjustment
5
• Earlier research…• Focus on China • Impact on specific geographical regions
• Goals of the paper• Comparative analysis of trade of China & India
(Chindia)• Assess trade competition & complementarity
between Chindia• Assess trade competition & complementarity with
other regions• Examine dynamics of trade relationships• Important lessons to be learnt
Introduction Introduction (cont.)(cont.)
6
II. The New Asian II. The New Asian Tigers Tigers
China
Japan
UK
Sub-Saharan AfricaWorld
Latin America & Caribbean
India
EMU
0
2
4
6
8
10
12
14
16
18
20
0 2 4 6 8 10 12 14 16 18 20
Average annual export growth (%)
Aver
age
annu
al im
port
grow
th (%
)
Figure 1: Average annual export, import and GDP growth (1990-2004)
7
The New Asian Tigers The New Asian Tigers (cont.)(cont.)
Table 1: Share of imports from the Asian tigers in total imports (%)
Source: Authors’ calculations based on IMF (2006a).
China India Japan
US Europe Japan US Europe Japan US Europe
1980-84 0.819 0.969 3.843 0.644 1.496 0.807 15.382 3.311
1985-89 1.756 2.119 4.998 0.674 1.714 0.973 20.558 3.520
1990-94 4.731 1.949 7.405 0.737 1.227 0.918 18.147 3.029
1995-99 7.294 1.537 12.330 0.856 0.539 0.793 14.154 2.073
2000-04 11.051 3.349 17.975 0.986 0.510 0.618 10.292 2.292
8
Table 2: Leading sectors in merchandise exports of China (%)SITC code Product group
1995
2000
2001
2002
2003
2004
752 Computer Equipment 1.55 4.41 4.92 6.18 9.3610.1
0
764Telecom. Equipment nes 2.72 4.96 5.79 6.17 6.34 7.44
759 Office Equipment 1.11 2.45 3.29 4.28 4.37 4.19845 Articles Of Apparel nes 4.02 4.40 4.20 3.78 3.42 3.07
894Baby Carriers/Toys/Games 3.99 4.09 3.74 3.88 3.30 2.76
776 Valves/Transistors/etc 0.87 2.15 1.85 2.23 2.37 2.73
763Sound/TV Recorders etc 0.67 1.15 1.55 1.99 2.40 2.67
751 Footwear 4.48 3.95 3.79 3.41 2.96 2.56
778Electrical Equipment nes 1.61 2.42 2.47 2.41 2.31 2.29
842Women/Girl Clothing Woven 4.02 2.92 2.85 2.78 2.53 2.16
Total25.0
432.90
34.45
37.11
39.36
39.97
Source: www.intracen.org
III. Trade Structure of ChindiaIII. Trade Structure of Chindia
9
Table 3: Leading sectors in merchandise exports of India (%)SITC code Product group
1995
2000
2001
2002
2003
2004
667 Pearls/Precious Stones 14.99
14.31
13.97
14.47
13.35
13.19
334 Heavy Petrol/Bitum Oils 1.43 4.20 4.76 4.77 5.46 8.35897 Jewellery 1.61 2.25 2.73 2.75 3.45 4.58281 Iron Ore/Concentrates 1.62 0.80 0.97 1.65 1.76 3.86
842Women/Girl Clothing Woven 4.87 4.49 3.91 3.60 3.00 2.53
651 Textile Yarn 4.26 4.42 3.62 3.47 3.08 2.37
542Medicaments Include Vet 1.84 1.94 2.21 2.46 2.35 2.29
658Made-Up Textile Articles 2.04 2.57 2.49 2.39 2.52 2.27
042 Rice 4.30 1.45 1.52 2.31 1.42 1.85
516Other Organic Compounds 0.51 1.17 1.22 1.33 1.73 1.68
Total37.47
37.60
37.40
39.20
38.12
42.97
Source: www.intracen.org
Trade Structure Trade Structure (cont.)(cont.)
10
Trade Structure Trade Structure (cont.)(cont.)Table 4: Competitiveness in exports: world market share and rank (2003)
Product China IndiaShare (%)
World Rank
Share (%)
World Rank
Basic manufactures 6.98 5 1.2 26Chemicals 2.63 11 0.94 20Clothing 21.59 1 2.74 8Electronic components 6.47 5 0.21 37Fresh Food 4.24 6 1.98 15IT & Consumer electronics 15.14 1 0.09 39Leather products 21.97 1 2.04 10Minerals 1.76 20 1.81 18Miscellaneous manufacturing 9.22 3 0.71 26Non-electronic machinery 3.28 7 0.32 32Processed Food 2.95 11 0.68 28Textiles 14.92 1 3.79 10Transport equipment 1.71 12 0.21 34Wood Products 2.68 11 0.15 52
11
Trade Structure Trade Structure (cont.)(cont.)
1996 1997 1998 1999 2000 2001 2002 2003 20040.6
0.65
0.7
0.75
0.8
0.85
0.9
0.95
1
China's correlation coeff icient China's similarity measureIndia's correlation coeff icient India's similarity measure
Figure 2: Chindia’s self-similarity dynamics
jjtktj
jjtktj
xx
xxS
)(
)(
1Similarity measure =
22)(
)(
)()(
))((
tjtktktj
tjtktktj
xxxx
xxxxrPearson correlation
coefficient =
• Dynamics of trade structure and specialisation
12
Trade Structure Trade Structure (cont.)(cont.)Figure 3: RCA Indices of China (2-digit SITC)
)/()/(
wtwj
itijij Xx
XxRCA
0 1 2 3 4 5 6 7
Travel goodsFootwear
Art apparelExplosivesCoal/coke
Sanitary fixturesOffice machinery
Textile yarn/fabricTelecom machinery
Furniture 19952003
0 2 4 6 8
Non-metal mineralTextile yarn/fabric
LeatherCrude fertilizer/min.
ApparelFeeds
CerealsTravel goods
Metalliferous oresCoffee/tea/spices 1995
2003
Figure 4: RCA Indices of India (2-digit SITC)
13
Trade Structure Trade Structure (cont.)(cont.)
Figure 5: Intra-distributional dynamics: Kernel density estimates (3-digit SITC) (i) China (ii)
India
0 5 10 15 200
0.1
0.2
0.3
0.4
0.5
0.6
RCA
Den
sity
19952003
0 5 10 15 20 25 300
0.2
0.4
0.6
0.8
1
RCA
Den
sity
19952003
14
Trade Structure (cont.)Trade Structure (cont.)Figure 6: Galtonian regression results (3-digit SITC)
0 2 4 6 8 100
1
2
3
4
5
6
7
8
RCA1995
RC
A20
03
RCA2003 = 0.24 + 0.66RCA1995t-value = (5.56) (24.65)R-squared = 0.82
0 2 4 6 8 100
1
2
3
4
5
6
7
8
RCA1995
RC
A20
03
RCA2003 = 0.24 + 0.66RCA1995t-value = (5.56) (24.65)R-squared = 0.82
0 5 10 15 200
5
10
15
20
RCA1995
RC
A20
03
RCA2003 = 0.52 + 0.65RCA1995t-value = (6.29) (9.80)R-squared = 0.80
0 5 10 15 200
5
10
15
20
RCA1995
RC
A20
03
RCA2003 = 0.52 + 0.65RCA1995t-value = (6.29) (9.80)R-squared = 0.80
Table 5: Overall specialisation in 2003 (3-digit SITC) China India
Median of sectoral RCA 0.63 0.51Standard deviation of sectoral RCA
1.50 2.46
Herfindahl Index of export shares
0.16 0.18
(i) China (ii) India
15
• Data• UN’s COMTRADE database • Product categories at three-digit level of
Standard International Trade Classification (SITC)
• Sample• 52 countries from Africa, Asia, Europe, Latin
America, North America• 262 product groups• Time period: 1995-2003
IV. Trade Competition & IV. Trade Competition & ComplementarityComplementarity
16
Competition & Competition & Complementarity (contd.)Complementarity (contd.)
• Coefficient of specialisation (CS)
n
njt
nit xxCS
211
nitxnjtx
= share of nth good in the exports of country i in time period t= share of nth good in the exports of country j in time period t
• Trade Complementarity Index (TCI)
n
njt
nit
ij
xmTC
21
= share of nth good in the imports of country i in time period tnitm
(0 ≤ CS ≤ 1)
(0 ≤ TCI ≤ 1)
17
• China and IndiaFigure 7: Export competition between
Chindia (1995-2003)
Competition & Competition & Complementarity (contd.)Complementarity (contd.)
0.20
0.25
0.30
0.35
0.40
0.45
0.50
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Coefficient of specialisationChina's complementarity w ith IndiaIndia's complementarity w ith China
18
• Export competition with other countriesFigure 8: Export Competition between China and other countries
Source: Authors’ calculations
Competition & Competition & Complementarity (contd.)Complementarity (contd.)
19
Figure 9: Export Competition between India and other countries
Source: Authors’ calculations
Competition & Competition & Complementarity (contd.)Complementarity (contd.)
20
Country Average TCI Country
Average TCI Country
Average TCI Country
Average TCI
Argentina 0.32 Egypt 0.22 Malaysia 0.53 Singapore 0.51 Australia 0.34 El Salvador 0.22 Mexico 0.44 South Africa 0.35
Austria 0.45 Finland 0.41 Morocco 0.21 Spain 0.4
Bangladesh 0.08 France 0.48 Netherlands 0.48 Sri Lanka 0.14
Belgium 0.44 Germany 0.52 New Zealand 0.24 Sudan 0.14
Brazil 0.39 Ghana 0.09 Niger 0.06 Sweden 0.45
Cambodia 0.04 Greece 0.33 Nigeria 0.05 Switzerland 0.4
Cameroon 0.12 Hong Kong 0.29 Norway 0.26 Thailand 0.51 Canada 0.42 Indonesia 0.41 Pakistan 0.14 UK 0.53 Chile 0.18 Iran 0.13 Peru 0.17 USA 0.57 Colombia 0.26 Italy 0.45 Philippines 0.36 Venezuela 0.17
Costa Rica 0.24 Japan 0.57 Portugal 0.37 Vietnam 0.23
Denmark 0.42 Korea 0.58
Table 6: Trade complementarity index between China and other countries
Source: Authors’ calculations
Competition & Competition & Complementarity (contd.)Complementarity (contd.)
21
Country Average TCI Country
Average TCI Country
Average TCI Country
Average TCI
Argentina 0.32 Egypt 0.24 Malaysia 0.34 Singapore 0.33
Australia 0.37 El Salvador 0.16 Mexico 0.36 South Africa 0.37
Austria 0.31 Finland 0.3 Morocco 0.17 Spain 0.34
Bangladesh 0.05 France 0.36 Netherlands 0.38 Sri Lanka 0.16
Belgium 0.4 Germany 0.36 New Zealand 0.22 Sudan 0.13
Brazil 0.32 Ghana 0.16 Niger 0.05 Sweden 0.32
Cambodia 0.03 Greece 0.28 Nigeria 0.27 Switzerland 0.28
Cameroon 0.33 Hong Kong 0.22 Norway 0.47 Thailand 0.3
Canada 0.37 Indonesia 0.39 Pakistan 0.1 UK 0.43 Chile 0.17 Iran 0.34 Peru 0.23 USA 0.39 Colombia 0.43 Italy 0.33 Philippines 0.19 Venezuela 0.36
Costa Rica 0.17 Japan 0.34 Portugal 0.27 Vietnam 0.37
Table 7: Trade complementarity index between India and other countries
Source: Authors’ calculations
Competition & Competition & Complementarity (contd.)Complementarity (contd.)
22
Dynamics of Trade CompetitionDynamics of Trade CompetitionTable 8: Empirical results for trade indices of China
Notes: *, **, *** indicate significance at 10%, 5% and 1% levels, respectively; constant included in all specifications.
CS TCI (i) (ii) (iii) (iv) (Real GDP)j 0.0114** 0.0129** 0.0228*** 0.0217*** (Real GDP per capita)j 0.0027*** 0.0044*** -0.0030** -0.0067*** (Economic freedom index)j 0.013 0.0112 0.0260*** 0.0283*** (Telephone mainlines)j 0.0001** 0.0001** 0.0002*** 0.0001*** (RCA raw material)j -0.0041* -0.0038 0.0027** 0.0019** (RCA tropical agriculture)j -0.0053*** -0.0056*** -0.0019 -0.0017 (RCA animal products)j 0.0056*** 0.0058*** -0.0026 -0.0037* (RCA cereals)j -0.0082*** -0.0079*** -0.0044** -0.0036 (RCA labour intensive)j -0.0084 -0.0078 -0.0149*** -0.0193*** (RCA machinery)j 0.0335* 0.0363* 0.0431*** 0.0316* (RCA capital intensive)j 0.0285*** 0.0276*** 0.0078 0.0089 (RCA chemicals)j -0.0046 -0.0045 0.0148 0.0119 Year dummies No Yes No Yes Partner country dummies Yes Yes Yes Yes Observations F-statistic for all regressors Adj R-squared F-statistic for fixed effects Hausman chi-square
421 8.63*** 0.97 103.55*** 39.51***
421 6.95*** 0.98 104.56*** 56.62***
421 8.65*** 0.98 53.77*** 78.81***
421 6.90*** 0.98 57.97*** 95.39***
23
Dynamics of Trade CompetitionDynamics of Trade CompetitionTable 9: Empirical results for trade indices of India
Notes: *, **, *** indicate significance at 10%, 5% and 1% levels, respectively; constant included in all specifications.
CS TCI (i) (ii) (iii) (iv) (Real GDP)j 0.0034 0.0018 -0.0041 -0.0091 (Real GDP per capita)j 0.0112*** 0.0091*** -0.0050*** -0.0014*** (Economic freedom index)j -0.0011 -0.0059 -0.0060 -0.0062 (Telephone mainlines)j 0.0001*** 0.0001*** -0.0001 -0.0001 (RCA raw material)j 0.0000 0.0012 -0.0066 -0.0013 (RCA tropical agriculture)j -0.0038*** -0.0024 -0.0081** -0.0065** (RCA animal products)j -0.0053*** -0.0067*** 0.0005 -0.0020 (RCA cereals)j 0.0031*** 0.0038*** -0.0042* -0.0039 (RCA labour intensive)j 0.0099** 0.0085* -0.0090 -0.0181** (RCA machinery)j -0.0266* -0.0299** 0.0402* 0.0603* (RCA capital intensive)j 0.0171** 0.0182** 0.0269*** 0.0301*** (RCA chemicals)j 0.0303*** 0.0245*** -0.0233* -0.0280* Year dummies No Yes No Yes Partner country dummies Yes Yes Yes Yes Observations F-statistic for all regressors Adj R-squared F-statistic for fixed effects Hausman chi-square
421 23.22*** 0.97 110.29*** 64.71***
421 23.34*** 0.97 138.74*** 43.14***
421 3.15*** 0.91 33.40*** 59.29***
421 3.97*** 0.92 36.54*** 48.56***
24
• Chindia experiencing change in export composition & RCA
• China tough competitor for• India, East Asia, Mexico, Western Europe, USA
• India tough competitor for• Neighbouring South Asian countries
• Potential for expanding trade… • China and India• East Asia, Europe and USA in manufactures• Latin America and Africa in resource based commodities
VI. VI. ConclusionConclusion
25
• Lessons for the developing countries• Human capital• Productivity and efficiency• Increasing saving and investment• Improving infrastructure• Improving business climate
Conclusion Conclusion (cont.)(cont.)
• Work in progress• Econometric analysis of trade impacts• Including the services sector
26
Thank You!