An appraisal of India’s comparative advantage in information technology exports

Abstract

Purpose

The purpose of this study is to estimate revealed comparative advantage and normalized revealed comparative advantage (NRCA) indices of India’s computer and information services (CIS) export competitiveness with regard to information technology (IT) competing developing nations, such as China, Philippines, Malaysia and Brazil.

Design/methodology/approach

Using annual data of total exports for CIS, transportation (TNS), travel (TVL) and insurance (INS) services under service categories of the balance of payment, the present study estimates the pattern of comparative advantage (CA) in India’s CIS exports with respect to IT competing developing nations such as China, Philippines, Malaysia and Brazil from 2000 to 2018. The choice of the study period is determined by the availability of consistent data on IT service exports of these nations. The study also estimates the export position of CIS export in comparison to India’s traditionally strong commercial services export of TNS, TVL and INS during the study period.

Findings

Both the indices showed that India had a strong CA in CIS compared to the selected nations, indicating India’s relative export performance to be stronger than that of China, Malaysia, Philippines and Brazil. The cross-service index showed that India’s relative specialization level in CIS with respect to the world’s average specialization level was stronger than its relative specialization level in TNS, TVL and INS services. Furthermore, The NRCA cross-nation index showed that India’s NRCA index score has been declining since 2010 with respect to these nations, which implied a decline in the competitiveness of CIS. On the other hand, NRCA has increased in the case of Philippines, Malaysia and Brazil for most of the period post-2010.

Research limitations/implications

IT is a dynamic area of economic activity, and when the pace of change is so rapid, the relevance of individual factors can change over time. The study period is also limited to the available data.

Practical implications

The paper has implications for attaining sustainability in IT export growth. It is suggested that policies are directed at enhancing the overall performance of IT sector.

Originality/value

The novelty of the present study lies in the estimation of India’s competitiveness in IT exports in relation to the group of reference countries. With its policy recommendations, this research is helping to shape the sustainability of the IT sector.

Citation

Hassan Malik, M., Anandarao, S. and Dar, A.A. (2023), "An appraisal of India’s comparative advantage in information technology exports", Journal of Chinese Economic and Foreign Trade Studies, Vol. 16 No. 2, pp. 136-152. https://doi.org/10.1108/JCEFTS-08-2022-0051