A Comparative Study on Impact of Trade in Goods and Trade in Services of India and China

Abstract

China and India are rapidly growing, labor-abundant economies with very different export mixes. China is more integrated into global production sharing for manufactures, while services exports are more important for India. Even assuming India integrates more comprehensively into global production chains, there will be opportunities for rapid growth in both countries. Improvement in the range and quality of their exports can create substantial welfare benefits for the world, and for China and India, and can offset the terms-of-trade losses otherwise associated with rapid export growth. Most countries will need to respond to increased competition in some sectors, and to greater opportunities in others.Economies are integrated within the international division of labour at different levels. How should the level of importance of international trade for a country be specified to compare it with other economies? This is being done by operationalizing the term openness degree, showing the importance of a country’s international trade by economy openness indicators. Hence, a high openness degree of an economy represents a high level of participation within the international interlocking of trade. The present paper tries to assess impactof trade in goods and trade in service of India and. The study found that impact of trade in goods on trade in services is very high in china compare to India.