A study of India-China export basket

Abstract

International trade thrives on the comparative advantage that economies offer, as proactive players in the world market. While Ricardo laid down the basic tenets of comparative advantage, Balassa (1965) developed the concept of revealed comparative advantage (RCA). The term thus connotes the idea, that countries specialize and export items, which they can produce at lower cost in comparison to the world. In Balassa’s (1986) view, the comparative advantage that a country enjoys primarily depends on its physical and human capital endowments. 1 Here in this first half of the study we are computing the Revealed competitive advantage of both India and China over a period of 2001 to 2010. During this period we tries to find out how RCA for different sector has been changing, what may be the possible influence for these changes and if possible tries to predict what may be the trends for these sectors.