Comparative Advantage of India in Foreign Trade With Japan

Abstract

This study assesses the foreign trade affecting factors based on review of literature. It also observes the impact of foreign trade on social and economic activities as per the existing studies. It explores the trend pattern of foreign trade of India with Japan since 1991. Finally, it also estimates the revealed comparative advantage index (RCAI) to examine India's potential in foreign trade with Japan after 1991. Technology, IPRs, R&D expenditure, technology spillovers, exchange rate, government policies, institutional activities, competitions, investment pattern, saving, inflation, national income, subsidies for exporters, restrictions on imports, reciprocal demand, tariff, change in factor endowments, balance of payments, international capital flows, bilateral and multilateral agreements and import substitutes, and economic structure of the countries are crucial drivers to increase foreign trade. The statistical values of RCAI also provide a confirmation that India is receiving potential benefits from foreign trade with Japan.