Analysis of Trade Before and After the WTO: A Case Study of India

Transcription

1 Global Journal of Financ and Managmnt. ISSN Volum 6, Numbr 8 (2014), pp Rsarch India Publications Analysis of Trad Bfor and Aftr th WTO: A Cas Study of India Dr. Shamshr Singh Assistant Profssor, Dpartmnt of Commrc, PGDAV Collg (Univrsity of Dlhi) Nw Dlhi drshamshr1@yahoo.co.in Abstract Th Prsnt rsarch papr analys th trad of India bfor and aftr th World Trad Organisation. Th Indian conomy has xprincd a major transformation in trad aftr th implication of WTO. On January 1, 1995 whn World Trad Organization (WTO) cam into xistnc th ntir conomy of th world affcts in rspct of intrnational trad bcaus WTO framd th nw global trad ruls for intrnational trad. This study is concrnd with implications of th WTO with rfrnc to India. How much trad has bn incrasd by India aftr th implmntation of th WTO? To analys th impact of WTO on forign trad of India th study is dividd into two parts tn yars bfor and tn yars aftr th WTO. How much th agricultur and industrial sctors wr contributing in boosting th trad of th nations bfor th WTO and how it is doing aftr th WTO. It concludd that trad of th India has not bn incrasd up to th xpctations that rsults in to low gaining of bnfits from world trad. Kywords: WTO, India, Exports, Imports, Intrnational Trad, Agricultur, Industry. 1. Introduction Th Prsnt rsarch papr analys th forign trad of India during th pr and post WTO. On January 1, 1995 whn World Trad Organization (WTO) cam into xistnc th ntir conomy of th world affcts in rspct of intrnational trad bcaus WTO framd th nw global trad ruls in th form of TERIFF and NON- TERIFF for in intrnational trad. This study is concrnd with implications of th WTO with rfrnc to India. How much trad has bn incrasd by India aftr th

2 802 Dr. Shamshr Singh implmntation of th WTO? Th incras in trad can rsult into bnfits of th WTO. To analys th impact of WTO on forign trad of India th study is dividd into pr-post WTO. How much th agricultur and industrial sctors wr contributing in boosting th trad of th nations bfor th WTO and how it is doing aftr th WTO. Although India had adoptd th procss of libralisation in 1991 but with th implmntation of World Trad Organization (WTO) in 1995 thr was incrasd opnnss in trad at global lvl. In fact, stablishmnt of th WTO was on of th motivating factors bhind th opn conomic policy pursud by th policymakrs of ths countris. 2. Mthodology Th various studis prdictd that du to th WTO world trad has bn incrasd in dvloping conomis. Whthr th WTO has affctd th Indian conomy in th sam way is focus of our study. Th study analys that trad composition and volum of trad of India during pr and post WTO using pr-post approach. Th study is basd on th conomtric analysis through rgrssion, t-tst to s th ffct of xplanatory variabls i.. Valu addd by industry in GDP in prcntag, Valu addd by Agricultur in GDP in prcntag, World Incom (US $ Billions), Gross Domstic Product of countris (US$ Million) on trad volum bfor and aftr th WTO. Th analysis covrs th data for th priod , i.. tn yars pr and tn yars post th WTO. Th study is basd on scondary data that has bn takn from World Bank wbsit. 3. Analysis of th Rsults Th trad volum in India has also continuously raisd pr and post th WTO with variation. Although th compound annual growth rat of trad during pr WTO (6.72%) was highr than th growth rat in pr-wto (6.46%). On th othr hand during th post-wto th CAGR of world trad has bn incrasd from 1.84% to 2.25%. Th trad volum of India was incrasing aftr th WTO implmntation, though not at so good rat as compard to world trad. This is du to th nw challngs facd by Indian conomy imposd by WTO. For India, th imports and xports hav bn incrasd for all th yars during pr and post th WTO. Th imports rmaind mor than xports for whol of th yars during pr and post th WTO, xcpt 1991 and Th growth rat of xports has falln within 10 yars aftr th implmntation of WTO. Th rlativly slowr growth rat of xports as compard to imports has contributd mor towards th slowr growth rat of trad. It may b concludd that th WTO has affctd th trad of India. It is vidnt that within tn yars aftr th WTO, thr rmaind highr growth rat of imports as compard to xports.

3 Analysis of Trad Bfor and Aftr th WTO: A Cas Study of India India s forign trad pr-wto Th Economtric tabl-1 shows th stimatd rsults of modl of India for th data-sts of pr WTO which focus on th four prdictors, whthr thy ar statistically significant and, if so, th dirction of th rlationship. Th ratio of industrial sctor in GDP (IN.IND., t=.544) is not significant (p=0.610), but has positiv impact on intrnational trad of India. Nxt, th ffct of agricultur sctor (IN.AGRI. t=-2.063, p=.094) is significant and its cofficint is ngativ indicating that th agricultur sctor is ngativly affcting th intrnational trad of India. India s GDP is also significant t-valu (IN.GDP ) but th cofficint is ngativ which would indicat that th ngativ ffct. Finally, th world GDP (WD.INCOM, t=9.840, p=.000) hav statistically significant valus for th data st pr WTO and indicat that positiv ffct. Modl Unstandardiz d Cofficints Tabl 1: Modl Rsults for India (Pr WTO) Standardi zd Cofficin ts Bta T Sig. 95% Confidnc Intrval for B Corrlations IN.GDP E 11 WD.INC OM * * B Std. Error Lowr Uppr Zroordr Bound Bound Parti al Part (Constant ) IN.IND IN.AGRI *.062 * 5.062E * Dpndnt Variabl: Trad (prcntag of GDP) No. of Obsrvations = 10 * dnots significant at 5 prcnt lvl and ** dnots significant at 10 prcnt lvl. Th tabl 2 is th Modl Summary of th variabls. Th R valu is.998, which rprsnts th simpl corrlation. It indicats a high dgr of corrlation. Th R 2 valu indicats how much of th dpndnt variabl, "India s trad as a prcntag of GDP", can b xplaind by th indpndnt variabl, " of xplanatory variabls i.. Valu addd by industry in GDP in prcntag, Valu addd by Agricultur in GDP in prcntag, World Incom (US $ Billions), Gross Domstic Product of countris (US$ Million)". In this cas,.99.6% can b xplaind, which is vry larg. Th F-tst *(F= ) is statistically significant, which mans that th modl is statistically significant.

4 804 Dr. Shamshr Singh Mod l R R Squar Adjust d R Squar Tabl 2: Modl Summary Std. Error of th Estimat R Squar Chang Chang Statistics F Chang 1.998(a) a Prdictors: (Constant), WD.INCOM, IN.INDUS, IN.AGRI, IN.GDP b Dpndnt Variabl: IN.TRAD df1 df2 Sig. F Chang Durbi n- Watso n India s forign trad post-wto Th tabl 3 shows th analysis of India s forign trad post-wto. Th t-tst for industrial sctor in GDP.953 hav prdictd positiv valu, but not statistically significant, maning that th rgrssion cofficint for industrial sctor in GDP affct th India s trad but not significant. Not that t-valu for agricultur sctor is (-.965) which is rmaind ngativ ffct vn aftr post WTO. Thr is pragmatic chang in India s GDP during post WTO with significant t-valu (IN.GDP 2.097). Th fourth, xplanatory variabl th world GDP is not statistically significant aftr WTO and indicat that ngativ ffct. Modl Tabl 3: Modl Rsults for India (Post WTO) Unstandardizd Cofficints Standardiz d Cofficints Bta t Sig. 95% Confidnc Intrval for B B Std. Error Lowr Bound Uppr Bound (Constant) IN.IND IN.AGRI IN.GDP 3.441E ** WD.INCOM E Dpndnt Variabl: Trad (prcntag of GDP) No. of Obsrvations = 10 * dnots significant at 5 prcnt lvl and ** dnots significant at 10 prcnt lvl. Th tabl 4 rflct th Modl Summary of th variabls aftr post WTO. "R" column rprsnts th valu of R, th multipl corrlation cofficints. R can b considrd to b on masur of th quality of th prdiction of th dpndnt variabl i.. India Trad. A valu of (.995, in this xampl, indicats a good lvl of prdiction. Th "R Squar" column rprsnts th R 2 valu (also calld th cofficint of

5 Analysis of Trad Bfor and Aftr th WTO: A Cas Study of India 805 dtrmination), You can s from our valu of that our indpndnt variabls xplain 99% of th variability of our dpndnt variabl. Th F-tst ( ) is statistically significant, which mans that th modl is statistically significant. Modl R R Squar Adjust d R Squar Tabl 4: Modl Summary. Std. Error of th Estimat R Squar Chang Chang Statistics F Chang 1.995(a ) a Prdictors: (Constant), WD.INCOM, IN.INDUS, IN.AGRI, IN.GDP b Dpndnt Variabl: IN.TRADE df1 df2 Sig. F Chang Durbin - Watso n Conclusion On th basis of conomtric and non-conomtric analysis of th study shows th impact of th WTO on intrnational trad of India. Th India has mixd rsults. Th WTO has affctd th trad slightly positivly, but not as xpctd. Th conclusion of th study is summarizd blow: Th trad volum of India was incrasing aftr th WTO implmntation, though not at so good rat as compard to world trad. This is du to th nw challngs facd by Indian conomy imposd by WTO. Th trad volum of India was rising bfor th WTO. Th country has not only maintaind th trnd but rat of growth in also incrasd. India is th only country in th currnt analysis, who has gaind advantag of th WTO in th prspctivs of intrnational trad. Th ratio of industrial sctor in GDP is not significant but has positiv impact on intrnational trad of India. Th industrial sctor in GDP aftr WTO hav prdictd positiv valu, but not significant. Th rat of incras in imports of India is gratr than rat of incras in xports vn aftr th WTO, which shows that India still fac th dficits in thir balanc of trads. Th ffct of agricultur sctor is ngativly affcting th intrnational trad of India bcaus th WTO causd srious concrn to th prformanc of agricultur sctor and food scurity. Th ngativ ffct of agricultur sctor rmaind continu vn aftr WTO. Th world GDP has positiv impact on India s trad during pr WTO but it has ngativ ffct aftr WTO. Th imports rmaind mor than xports for whol of th yars during pr and post th WTO, xcpt 1991 and Th rlativly slowr growth rat of xports as compard to imports has contributd mor towards th slowr

6 806 Dr. Shamshr Singh growth rat of trad. It is vidnt that within tn yars aftr th WTO, thr rmaind highr growth rat of imports as compard to xports. India s GDP is also significant t-valu but th cofficint is ngativ which would indicat that th ngativ ffct. Thr is pragmatic chang in India s GDP during post WTO and positivly affct th trad of India. Th trad volum of India was rising bfor th WTO. Th country has not only maintaind th trnd but rat of growth in also incrasd. India is th only country, who has gaind advantag of th WTO in th prspctivs of intrnational trad. For India, both th growth rat of xports and imports has risn aftr th WTO. Th contribution of industrial sctor to th nation s intrnational trad has bn incrasd aftr th WTO. Thus WTO has bn playing a vry important rol in India's forign trad. It nds furthr rsarch to s why India has not bnfitd from th WTO as pr xpctation whil th major spculatd bnficiaris of th WTO wr th dvloping countris. As concrnd th conomtric rsults, w hav to wait for som yars to hav th robust rsults about th impact of diffrnt variabls on intrnational trad of th nations bfor and aftr WTO. It is suggstd that bing a mmbr of th WTO, India njoys th most-favourd nation status instad of accpting th agrmnts which ar against th national intrst. Scop of th abov studis is rstrictd factors and it has not covrd th othr implications of th WTO. Th othr implications of WTO which ar concrnd with India must b study for rsarch. Howvr as mntiond in th abov analysis thr is srious and urgnt nd to r-analys th policy followd by India in th contxt of incrasing comptition and opnnss at global lvl. Rfrncs [1] Hrtal, T., Christian, F.B. Btrina, D. and Will, M. Growth, Globalization and Gains from Uruguay Round, (1996)Working Papr No. 1694, World Bank. [2] Goldn, I. and Dominqu, V. D. M.. Assssing Agricultural Tarrification undr th Uruguay Round, Cambridg Univrsity Prss, (1996)UK. [3] Ingco, Mlinda, Has Agricultural Trad Libralization Improvd Wlfar in th Last Dvlopd Countris? Ys. Policy Rsarch Working (1997) Papr No. 1748, World Bank, Washington, D.C. [4] Panagariya, A., India at Doha: Rtrospct and Prospct, Economic and Political Wkly, (2002) January 26 [5] Thum, C., Trad Libralization Bnfits Dvloping Countris. Working Papr, Mark Twain Institut Publications. Pakistan Journal of Commrc and Social Scincs Vol [6] Ramanna, A. India s Patnt Policy and Ngotiations in TRIPS: Futur options for India and othr Dvloping Countris, Papr prsntd in th National Confrnc on TRIPS- Nxt Agnda for Dvloping Countris, Shyamprasad Institut for Social Srvic, Hydrabad, (2002), Octobr 11-12

7 Analysis of Trad Bfor and Aftr th WTO: A Cas Study of India 807 [7] Moor, M. Agricultur s Stat in WTO Trad Ngotiations. [Onlin] Availabl, Pakistan Journal of Commrc and Social Scincs Vol Mustafa, U., Malik, W. and Sharif, M. (2005). Globalization and Its Implications for Agricultur, Food Scurity and Povrty in Pakistan. Pakistan Dvlopmnt Rviw, (2002), 40 (4): [8] Mattoo, A. and Subramanian, A. India and th Multilatral Trading Systm Post-Doha: Dfnsiv or Proactiv?, in Aaditya Mattoo and Robrt M. Strn (ds.) India and Th WTO, Washington, DC: (2003), Th World Bank and Oxford Univrsity Prss. [9] Chakraborty, D. Rcnt Ngotiation Trnds on Agricultur undr WTO, RGCIS Working Papr, No. 47, (2004), Sptmbr [10] Pal, P., Currnt WTO Ngotiations on Domstic Subsidis in Agricultur: Implications for India, ICRIER Working Papr, No.177, (2005)Dcmbr [11] Kmal, A.R. Mulh-ud-Din and Ghani, E. (2005). Non-agricultur Markt Accss: Prioritis for South Asia. Brifing Papr No. 5. Pakistan Institut of Dvlopmnt Economics, Islamabad. [12] Das, K. GATS Ngotiations and India, Evolution and Stat of Play, Cntad Working Papr, (2006), No. 7 [13] Chand, R., Intrnational Trad, Food Scurity and th Rspons to th WTO in South Asian countris. (2006) Rsarch Papr No [14] Banga, R. Statistical Ovrviw of India s Trad in Srvics, in Rupa Chanda (ds) Trad in Srvics & India, Prospcts and Stratgis, Nw Dlhi: (2006),CENTAD and Nw Dlhi: Wily India (P) Ltd. [15] Ray, A.S. India s Economic Rforms: Opportunitis, Challngs and Political Economy Prspctivs, in Lyal Whit (ds) Is thr an Economic Orthodoxy? Growth and Rform in Africa, Asia and Latin Amrica, (2006), Johannsburg: South African Institut of Intrnational Affairs [16] D.C. Robrt, L.T, Globalization and th Bnfits of Trad. (2007)Working Papr. Fdral Rsrv Bank of Chicago. [17] Rana Ejaz Ali Khan and Muhammad Ijaz Latif Pakistan Journal of Commrc and Social Scincs Vol [18] Information on

8 808 Dr. Shamshr Singh