Domestic Versus Imported Contents in Exports: The Case of Indiaâ€™s Merchandise Trade
Deb Kusum Das,
Pilu Chandra Das and
Journal of South Asian Development, 2020, vol. 15, issue 1, 62-96
This article combines national inputâ€“output tables (1998â€“1999 to 2007â€“2008) with World Inputâ€“Output Database (1995â€“2011) to evaluate foreign value-added (FVA) content in Indiaâ€™s exports at aggregate and disaggregate levels. The results confirm rising FVA and declining domestic value added (DVA) in Indiaâ€™s total and merchandise exports across a majority of the commodities. Indiaâ€™s international fragmentation has risen but continues to be lower than that of East Asia and Association of Southeast Asian Nations (ASEAN). Strikingly, a regression-based decomposition analysis shows greater positive impact of rise in FVA on Indiaâ€™s export growth as compared to imports, leading to substantial net gains. Second, Indiaâ€™s DVA content in exports did not decline much during 2007â€“2011, thereby displaying a sluggish upward trend in its FVA content. This article advocates the need for striking a right balance between the goals of increasing FVA (improving linkages into global value chains) to enhance export competitiveness and maintaining DVA (supporting the â€˜Make in Indiaâ€™ initiative) in exports to generate employment opportunities domestically.
Keywords: Import content; Indian exports; foreign value added; domestic value added (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:soudev:v:15:y:2020:i:1:p:62-96
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