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Global economies of scale in the EU-India trade agreement: are they the key to a return to economic growth?

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Abstract

Economies of scale are an alternative source of growth particularly at a time when countries are suffering from global economic malaise. The proposed EU-India free trade agreement holds substantial promise as this will create a combined market of over one and a half billion and generate economies of scale from intra-industry trade, which are likely to be concentrated in manufactured products such as chemicals, machinery and transport equipment. Bold action is needed on the part of politicians in both the EU and India to successfully negotiate the agreement given that this will enable both countries to reap the efficiency gains of global economies of scale, provide a significant competitive advantage over other major economies and deliver the necessary spur to shake both the EU and India out of their current economic stagnation.

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Notes

  1. In the WTO’s General Agreement on Trade in Services (GATS) services fall into four modes: (Mode 1) cross border supply whereby services flow across borders (e.g. outsourcing or book editing); (Mode 2) consumption abroad (e.g. tourism); (Mode 3) commercial presence whereby a service supplier establishes itself in the importing country (e.g. a branch of a foreign bank or a subsidiary doing after sales service) and; (Mode 4) presence of natural persons (e.g. doctors or lecturers journeying to a foreign country to deliver their services).

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Authors and Affiliations

  1. School of Management and Business, Aberystwyth University, Aberystwyth, UK

    Sangeeta Khorana & Nicholas Perdikis

  2. Department of Bioresource Policy, Business and Economics, University of Saskatchewan, Saskatchewan, Canada

    William A. Kerr

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  1. Sangeeta Khorana
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  2. Nicholas Perdikis
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  3. William A. Kerr
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Correspondence to Sangeeta Khorana.

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Khorana, S., Perdikis, N. & Kerr, W.A. Global economies of scale in the EU-India trade agreement: are they the key to a return to economic growth?. Asia Eur J 13, 41–55 (2015). https://doi.org/10.1007/s10308-014-0404-8

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  • DOI: https://doi.org/10.1007/s10308-014-0404-8

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