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

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Intra-industry Trade of India

Is It Horizontal or Vertical?

The structure of India’s intra-industry trade, more specifically, decomposition of IIT into horizontal and vertical trade is analysed using support vector machines as the existing approaches to disentangle IIT into horizontal and vertical trade suffer from some limitations. For the period 1978–2013, at the SITC 5-digit disaggregated level, more of India’s IIT is of the horizontal type when compared to the Greenaway-Hine-Milner approach. This has important policy implications as far as trade-induced adjustments costs are considered. However, over time the share of HIIT in total IIT is declining, whereas the share of VIIT is rising which may indicate technological improvement.

The authors wish to thank the anonymous referee for valued comments and suggestions.


The paper analyses the structure of India’s intra-industry trade (IIT), more specifically, the decomposition of IIT into horizontal intra-industry trade (HIIT) and vertical ­intra-industry trade (VIIT). The issue is worth analysing because recent empirical evidences across the globe reveal that the ­diversification and composition of the export basket of a country are important determinants of its economic growth (Aditya and Acharyya 2013; Hausmann et al 2007). Since IIT constitutes a major portion of a country’s trade, it will be interesting to know the extent of horizontal and vertical differentiation of a country’s export basket.

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Updated On : 21st Jun, 2019
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