Extensive and intensive margins of India's exports: Comparison with China

C Veeramani and Prachi Gupta ()
Additional contact information
Prachi Gupta: Indira Gandhi Institute of Development Research

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: Should India's export promotion policies be targeted at accelerating export growth at the extensive (new trading relationships) or at the intensive margin (increase in trade of existing relationships)? To help answer this question, we undertake a comparative study of exports from India and China by analysing the role of extensive and intensive margins in the export market penetration of the two countries during 1995-2011. We further decompose intensive margin into quantity and price margins. As far as extensive margin is concerned, our results show that the gap between the two countries is getting narrower as India is clearly catching up with China. By contrast, India lags significantly behind China in terms of intensive margin due to an abysmally low and stagnant quantity margin. Intensification, rather than diversification, has been the crucial driving force of China's export success. India's exports of capital-intensive products performed better compared to labour intensive products. The lacklustre performance in labour-intensive exports is entirely due to a lack of depth inIndia's market presence even as it expanded the range of its products and markets. Our analysis suggests that India can reap rich dividends by adopting policies aimed at accelerating export growth at the intensive margin. Contrary to the general perception, there exist a great potential for India to expand and intensify its export relationships with the traditional developed country partners.

Keywords: Exports; Extensive Margin; Intensive Margin; India; China (search for similar items in EconPapers)
JEL-codes: F10 F14 F15 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2014-03
New Economics Papers: this item is included in nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.igidr.ac.in/pdf/publication/WP-2014-011.pdf (application/pdf)

Related works:
Working Paper: Extensive and Intensive Margins of India's Exports: Comparison with China (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2014-011

Access Statistics for this paper

More papers in Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India Contact information at EDIRC.
Bibliographic data for series maintained by Shamprasad M. Pujar ().