Abstract:
This paper focuses on two aspects of India’s intra-industry trade
(IIT) in manufactured commodities under economic liberalization. First,
it examines the changes in the intensity of multilateral IIT as between
1987-88, 1994-95 and 1998-99 to understand the impact of trade
liberalisation on IIT. Second, within the theoretical framework of vertical
IIT, it analyzes the influence of various country specific factors on the
intensity and the probability of IIT in India’s bilateral trade with her
major trading partners. The findings confirmed the hypothesis that trade
liberalization biases trade expansion towards IIT. In most of the industries,
the increased levels of IIT are export-led, that is, caused by a faster growth
of exports than of imports. The econometric exercise showed that, certain
country specific factors which are found to be crucial in theory, are
pertinent in determining the country pattern of India’s IIT.
