A Comparative Analysis of Balance of Payments of India and China

1657 Words Jan 6th, 2011 7 Pages
China and India: a Comparison of Two Trade Integration Approaches
By Przemyslaw Kowalski Discussion Matthieu Bussière
European Central Bank

New Delhi, 7 December 2007

Note: The views expressed in this presentation are those of the author and do not necessarily reflect those of the ECB.

Main assessment of the paper
• A very nice overview of a key topic
Useful comparison China/India A valuable effort to collect relevant data

• •

Two main assets: discussion of trade policy and model simulations Main suggestion: refocus the paper on the latter
– Other suggestion: flesh out the conclusions

Three possible views on India’s development
1. Is India a new China in the making ? India = L10(China) 2. Is India simply in a lower league ? India <
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Netherlands Denmark Italy Spain Argentina Thailand Singapore Belarus Brazil UK Japan Protugal South Korea Romania Sweden Slovak Rep. Australia Austria Czech Rep. Greece Finland Hong Kong Mexico Poland Chile Turkey Slovenia Croatia Canada Bulgaria Latvia Norway Uruguay Cyprus USA Peru Moldova Colombia New Zeal. Lithuania Estonia Hungary Philippines Macedonia Ireland China Ecuador

-2.0

-1.5

-1.0

-0.5

Euro area China

1. Goods

Some accounting
• • • Over the period 1994-2002, China’s trade rose by 140% China’s real GDP roughly doubled GDP of RoW rose by slightly over 40% Model predicts 150% rise In 2003, China’s trade rose by 30% China’s real GDP rose by 10% GDP of RoW rose by less than 5% Model predicts 9% rise

• • •

Can trade policy explain this gap?

Focus of the discussion on three main topics

1. Trade openness and the effect of trade policy 2. The role of services (for India, China and RoW) 3. Trade specialisation (high-tech v. low-tech) • • Not covered: (Net) trade integration …and what to conclude from that ?

Motivation: the importance of trade in services.
Share of services in total exports (in blue)
World: 19%

Euro area: 23%

US: 29%

India: 38%

China: 8.7%

Source: WEO, 2006.

Motivation: the importance of trade in services.
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