Research On Trade Cooperation Between India And EU

The growth of Global trade has slowed down and the growth of world economy has been sluggish since the international financial crisis.After 10 years of adjustment,driven by the slow recovery of world economy in 2017,Global trade shows a growth trend.However,there are still many unstable factors,‘anti-globalization’,trade protectionism and unilateralism are threatening the growth of Global trade and affecting the process of economic globalization.As the world’s largest trading group and the fastest growing developing country,India-EU trade cooperation will be conducive to complementing bilateral advantages,achieving mutual benefit and win-win results,safeguarding free trade and accelerating the recovery of global trade.This paper makes a simple analysis of the trade cooperation between India and the EU at the beginning.Then,through the analysis of trade volume,import and export market and commodity structure between India and EU,this paper systematically summarizes the current situation and characteristics of India-EU trade in goods.What’s more,by introducing RCA index,export similarity index,trade complementarity index and intra-industry trade index,the trade competitiveness and complementarity between India and EU are measured.On this basis,the competitiveness and complementarity between India and EU member states are expounded.Finally,on the basis of the basic gravity model,this paper builds an extended gravity model by adding two variables: human capital stock and R&D expenditure.It empirically analyses the influencing factors of bilateral trade between India and EU,and estimates the potential of expected trade volume based on the empirical model.Through the above analysis and research,this paper draws the following conclusions:Firstly,the bilateral trade in goods between India and the EU has grown rapidly,with an average annual growth rate of 12.75% in imports and 17.42% in exports from 2000 to 2017.Although India has become an important trading partner of the EU,the proportion of trade volume between India and the EU in the total trade volume of the EU is still at a low level,and there is room for further growth.Secondly,the EU is a largest export market and the second largest import market for india,and India ranks ninth in the EU’s import and export market.From the perspective of EU member countries,the trade development between India and EU members is not balanced,and the main exporters and importers are concentrated in Britain,Germany and Belgium.France and other countries.In terms of the types of goods traded between the two sides,machinery and transport equipment are the highest imports from the EU by India,while the export of manufactured goods classified by raw materials to the EU is the highest,reaching US$13.82 billion in 2017.Generally speaking,bilateral trade is mainly concentrated on manufactured goods.Thirdly,by calculating the trade competitiveness related index between India and the EU,it can be concluded that SITC-0,SITC-5 and SITC-6 are the most competitive commodities for both sides,India and the EU compete fiercely in Australia,China,Japan,South Africa,the United Arab Emirates and the United States.The RCA index values of the two sides are different in SITC-1,SITC-3 and SITC-7.It has great potential for trade cooperation.By calculating the trade complementarity index,it is found that when India is an exporter,there is strong trade complementarity between the two sides in SITC-0,SITC-5,SITC-6 and SITC-8 commodities,while among the commodities exported by the EU,SITC-4 commodities have the highest trade complementarity with India,and the complementarity is increasing with the passage of time.In addition,the value of the comprehensive trade complementarity index between India and the EU is between 0.8 and 1.1,which has high trade complementarity and good cooperation prospects.The calculation results of intra-industry trade index show that the level of intra-industry trade between India and EU is not low,among which SITC-5 commodities are the most active.Generally speaking,India’s trade cooperation with the EU and its member countries has great potential,and intra-industry trade has great room for development.Finally,empirical research shows that GDP,human capital stock and R&D investment have a positive impact on bilateral trade,but distance has a negative correlation with trade volume.The calculation results of trade potential value show that the potential value of trade in goods between India and EU is less than 1 in six years from 2008 to 2017,which indicates that there is a great potential for bilateral trade cooperation and there is a greater room for growth.From the perspective of EU 28 members,the trade potential situation between India and EU 28 members is not consistent,but the trade potential between India and most members needs to be developed.The merchandise trade of a small number of member countries shows the phenomenon of ‘over-trade’.In a word,the trade cooperation between India and the EU has a good foundation.India’s trade potential with the EU has not been fully realized,bilateral trade cooperation has broad prospects.For China,we can gain many enlightenments from the development of bilateral trade between Indo-European countries,draw lessons from it and improve our trade competitiveness.