Dr. Sarthak Dasgupta
Assistant Professor, EIILM – Kolkata
Email: sarthakd16@iimcal.ac.in
Aratrika Roy Chowdhury
Assistant Professor, EIILM - Kolkata
Email: aratrikaroychowdhury@gmail.com
Somrita Chakraborty
Assistant Professor, EIILM – Kolkata
Email: Somrita.chak91@gmail.com
JEL Classification: F13, F62 https://doi.org/10.65176/IJLM.V2I1.09
ABSTRACT:
India, Russia, and China seem to be major powerhouses in the global economy. This trio might look like an impossible trinity, but if it can be made possible, then the global economy might see a surge in the economic growth trajectory. There is a candidate set of factors that might make this impossible trinity possible, but the most impactful endogenous factor would be the international trade relations among the three countries. An improvement in trade relations among these countries could be a consequence of the tariff war initiated by the USA. With this backdrop, a pertinent question arises: What happens to certain indicators of trade in the long run for India, Russia, and China?
While China is a hostile neighbour to India, experts have shown optimism in improved bilateral relations, mainly through trade agreements. Apart from the common agenda of the US, India, and China, the BRICS bloc provides an official platform for better bilateral ties. Since its Independence, India has been more inclined towards Russia in terms of economic planning and foreign policy. Russia has been an unwavering friend, starting from its heroics during the 1971 war, and the two countries have successfully conducted international trade in their respective currencies without depending on US dollars.
In this study, we attempt to estimate the long-run equilibrium relationship of the trade-to-GDP ratio of India, Russia, and China. The econometric specifications employed in this study are an Auto-Regressive Distributed Lag Model (ARDL) in a Time Series model framework. The ARDL Error Correction Method (ECM) would be used as the analytical tool to confirm (or not confirm) the long-run relationship of the trade-to-GDP ratio of the three countries. The main variables of interest will be collected from the IMF and World Bank. Tracing the long-run relationship of Trade to GDP of these three powerhouse economies would have ample policy implications in the global forum.
Keywords: Tariff war, Trade to GDP ratio, India, China, Russia, ARDL
JEL Classifications: F13, F62
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