India’s comparative advantages in services trade
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In the recent decades, India has not only experienced substantial growth in its services trade with the rest of the world but has also become a net exporter of services. Using the annual exports and imports data of 10 disaggregated service items from 2000 to 2013, this paper computes and analyzes various comparative advantage (CA) measures. The analysis reveals that India has had a CA in computer and information services and other business services (that include a wide range of information-intensive services) for the entire sample period. These two service categories together accounted for more than two-thirds of the total commercial services export from India. Furthermore, according to an alternative CA measure that considers intra-industry trade, India seems to have CA over the rest of the world in different services such as travel, communication services, and personal, cultural, and related services as well. This paper further explores the shape and dynamics of the distribution of the CA measures by employing a nonparametric method. The distributional dynamics analysis indicates that India is more likely to lose CA over the rest of the world than to gain dominance from a comparative disadvantage (CDA) position in services trade.
KeywordsServices trade Comparative advantage (CA) Comparative disadvantage (CDA) Revealed comparative advantage (RCA) Revealed symmetric comparative advantage (RSCA) Trade Balance Index (TBI) India
JEL classificationsF14 O57
The authors are grateful to an anonymous reviewer and the Managing Editor of the journal for their comments. A major part of this research was conducted when Nath was a Visiting Professor at the Department of Humanities and Social Sciences, Indian Institute of Technology—Guwahati (IITG), India, during the 2016–17 academic year. He is grateful to IITG for its hospitality and support. An earlier version of the paper was presented at the 86th Annual Meetings of Southern Economic Association held in Washington, D.C. (USA) in November 2016 and at the School of Economics, University of Hyderabad, India, in April 2017. The authors would like to thank Zachary H. Cohle and other session participants at the conference and Phanindra Goyari and the seminar participants at the university for their valuable comments. The usual disclaimer applies.
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