ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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A Quantitative Assessment of the EU–India Free Trade Agreement

With EU–India clinching a post-Brexit trade negotiation, the present paper proposes to examine whether the free trade agreement between the two regions would increase production efficiency and thereby social welfare. Using the partial equilibrium model, the study reveals that the EU–India FTA yields less positive trade and welfare gains in India after Brexit specifically, for consumer, industrial, and capital goods, whereas it would still be in India’s interest towards the specific benign impact of an FTA in raw materials, intermediate goods, and agricultural goods. From the policy perspective, India is not well-served by its pursuit of protectionist agenda and instead should push for trade liberalisation as a better path for the global trading system.

Determinants of Export Decision of Firms

This paper contributes to the more recent strand in the analysis of trade flows that uses data on exports of individual firms. In all countries of the world, relatively few firms participate in world trade, thus suggesting that besides country level barriers to trade, characteristics of a firm such as its size and productivity are relevant for participation in trade. Using firm level data, this study attempts to model and estimate the decision of Indian firms on their participation in trade. Firm heterogeneity is an important determinant of the decision to export. Exporting firms are significantly larger, more r&d-intensive, low wage-intensive, more productive and more profitable than non-exporting firms. The multinomial results reveal that the probability of survival of new firms in export markets is lower when compared to those which have been exporting in the previous years.
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