Transcript Document

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
• 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
• 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
• Direction of Trade
• Composition of Trade
• Diversification of Trade
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
• 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
A: Primary
NCAER
UNCTAD
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)
E: Human capital intensive
E1: Low & medium human capital
intensive (33)
D: Medium skill &
technology
E: High skill & technology
E2: High human capital intensive (10)
Not classified
F: Unclassified (2)
F: Unclassified
Billion $
Trade Balance Region wise, TE 2006
140
120
100
80
60
40
20
0
-20
-40
-60
113.2
66.4
58.7
2.5
ASEAN-4
-3.7
-25.3
EU-25
-1.9
Japan
-1.4
-20.7
NIES-4
7.4
USA
World
-44.2
China
TE: Triennium Ending
103.9
India
Trade Balance GroupWise, TE 2006
200
177.6
150
103.9
Billion $
100
35.9
50
5.6 3.7
14.7
30.3
7.5
0.2
0
A
-50
B
C
-3.9
D1
-8.0
-33.3
D2
-17.1
-38.4
E1
E2
-100
-103.2
-150
A: Primary
C: Unskilled labour intensive
D2: High technology intensive
E2: High capital intensive
TE: Triennium Ending
B: Natural resource intensive
D1: Low & medium Technology intensive
E1: Low & medium human capital intensive
China
India
Total
-44.2
Shares (%)
Export Composition Regionwise,
TE 2006
90
80
70
60
50
40
30
20
10
0
1.2
21.2
21.0
6.6
16.2
10.9
9.8
2.4
18.6
21.8
4.1
4.3
China
India
ASEAN-4
TE: Triennium Ending
EU-25
Japan
NIES-4
USA
Bilateral
Import Composition Regionwise,
TE 2006
70
Shares (%)
60
1.4
7.6
50
15.5
40
30
7.6
6.2
5.0
2.6
15.5
20
10
0
ASEAN-4
TE: Triennium Ending
11.7
16.6
8.4
5.4
China
India
EU-25
Japan
NIES-4
USA
Bilateral
Export Composition Group wise,
TE 2006
TE: Triennium Ending
4.9
1.4
E2: High capital intensive
11.9
17.2
E1: Low & medium human capital intensive
32.1
11.7
D2: High technology intensive
14.6
6.5
D1: Low & medium Technology intensive
25.9
19.5
C: Unskilled labour intensive
4.3
15.7
B: Natural resource intensive
6.1
27.9
A: Primary
China
India
Import Composition Group wise,
TE 2006
1.1
0.9
E2: High capital intensive
8.3
6.7
E1: Low & medium human capital intensive
42.8
19.8
D2: High technology intensive
D1: Low & medium Technology intensive
17.5
9.9
C: Unskilled labour intensive
TE: Triennium Ending
3.4
3.5
4.1
8.7
22.5
42.3
China
India
B: Natural resource intensive
A: Primary
China's region wise trade balance in
select manufacturing sectors, TE 2006
200
177.6
150
Billion $
100
50
34.1
44.7
30.0
18.5
29.0
22.7
9.6
3.0
1.2 2.9
0
ASEAN-4
-25.5
EU-25
Japan
NIES-4
USA
India
-21.1
-38.4
-50
C: Unskilled labour intensive
TE: Triennium Ending
World
D2: High technology intensive
India's region wise trade balance in
select manufacturing sectors, TE 2006
16
14.7
14
12
Billion $
10
7.5
8
6.8
6
4.5
4
3.0
2
0.7
0.2
0.2 0.0
0.0
0
ASEAN-4
-2
EU-25
-0.1
Japan
-0.7
C: Unskilled labour intensive
TE: Triennium Ending
NIES-4
USA
China
-0.7
-1.1
E1: Low & medium human capital intensive
World
Figure 9: India's Bilateral Trade with China, TE 2006
2.3
9.0
12.9
7.7 0.8
5.5
13.6
11.2
2.6
1.8
Exports
6.1
67.3
Imports
43.8
15.3
A: Primary
C: Unskilled labour intensive
D2: High technology intensive
E2: High capital intensive
TE: Triennium Ending
B: Natural resource intensive
D1: Low & medium Technology intensive
E1: Low & medium human capital intensive
Inferences: China
• 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
•
•
•
•
•
•
•
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
•
•
•
•
•
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 technologyintensive 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