Structure of Comparative Advantage of China and India： Global and Regional Dynamics

Structure of Comparative Advantage of China and India: Global and Regional Dynamics

This paper investigates the extent of competition between China and India in the world and ASEAN markets. The analysis is undertaken using the concept of revealed comparative advantage, relative market shares, long‐term trend analysis and statistical tests of convergence. In the context of the ASEAN market the evaluation of competition between India and China has been undertaken with special reference to the prior implementation of the ASEAN‐China Free Trade Area relative to the ASEAN‐India Free Trade Area. The results suggest that threat perceptions at the product level might currently prevail for both economies from each other across all sectors in both markets even though the intensity of the competitive threat varies across products. However, long‐term trend analysis shows that the patterns of comparative advantage of India and China are evolving along divergent paths and, therefore, competition between the two economies might not be a major issue.