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India’s Trade Potential with China: A Gravity Model Approach

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Alka Sandhu,Harpreet Kaur
» doi: 10.48047/ecb/2023.12.10.093

Abstract

The objective of the study is tofind out thepotential of trade for India with its neighbor China by using gravity model analysis in a time series data set that covers the time period from 2001 to 2022. The results of OLS and GLS indicate that India’s bilateral trade with China is positively impacted by GDP, PCGDP, POP of India whereas it is negatively affected by relative factor endowment and distance.The study revealed that bilateral trade is positively affected by common border, trade agreement (PTA) and common language which proves that language barrier does not impede trade between both nations. The study finds that there exists trade potential for India with China.

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