Trade linkages between China, India and Singapore: Changing comparative advantage of industrial products

Abstract

Purpose

The purpose of this paper is to examine the trade linkages and degree of export competitiveness between Singapore, China and India.

Design/methodology/approach

Balassa's export performance index and the dynamic RCA index was adopted, as suggested by Kreinin and Plummer to identify the revealed comparative advantage (RCA) of the above countries in industrial products by SITC 1‐ and 2‐digit levels. The Spearman's rank correlation coefficient is used to identify the degree of complementarity between RCA indices.

Findings

Given the abundant resources, China and India have comparative advantage in a broad range of manufactured goods as compared to Singapore. From the disaggregated analysis at 2‐digit level, the paper finds that the Singapore and China exports are complements, although the degree of complementarity has being declining over time. Meanwhile, Singapore and India exports are found to be stronger complements and stable over time. The results also show that China and India exports are strong substitutes. The paper also finds that the export specialization of China and India has experienced significant changes and shifting to new export products over time.

Originality/value

Given the recent trade agreements between China and Singapore and India and Singapore, it is important to examine the trade linkages (complementarity/substitutability of trade) between these countries. The paper highlights the importance of China and India in complementing countries such as Singapore as it climbs the technological ladder to maintain its competitiveness in the world market.

Citation

Jayawickrama, A. and Thangavelu, S.M. (2010), "Trade linkages between China, India and Singapore: Changing comparative advantage of industrial products", Journal of Economic Studies, Vol. 37 No. 3, pp. 248-266. https://doi.org/10.1108/01443581011061267