A Constant Market Share Analysis of India’s Export Performance
| Author | Kulwinder Singh |
| DOI | 10.1177/0015732514525190 |
| Published date | 01 May 2014 |
| Date | 01 May 2014 |
| Subject Matter | Articles |
A Constant Market Share
Analysis of India’s Export
Performance
Kulwinder Singh
Abstract
In the light of substantial improvement in export growth and changing internal
and external economic environment, this article investigates the major sources
of India’s exports performance during the post-liberalization period (1991–2011)
by using constant market share model. It is found that growth of India’s exports
found to be outstanding as it was remained well above the growth of world
exports as well as export growth of the majority of the giant exporters except
China during this period. The analysis reveals that export performance was
mainly attributed to their competitive strengths in the global export market,
however world demand for exports also proved as its important source. It is
also emphasized that competiveness of India’s export remained prone to high
inconsistencies arising out of changing external environment. Consistently nega-
tive composition effect came out as the most disturbing aspect of India’s export
performance. On the other hand, market distribution has laid marginally posi-
tive impact on export performance. Given the export promotion outward ori-
entation as strategy of development, inconsistent competitiveness and wrong
specialization pattern of exports could adversely influence their performance in
particular and also have wider implications for the external sector in general.
JEL: F14
Keywords
India’s exports, export performance, competitiveness, world demand
Introduction
The global trends in economic growth across countries have traversed different eco-
nomic regimes over the past decades. In the recent decades, the globalization proc-
ess has entailed decisive policy changes, the world over (Das, 2006). Establishment
Article
Foreign Trade Review
49(2) 141–161
©2014 Indian Institute of
Foreign Trade
SAGE Publications
Los Angeles, London,
New Delhi, Singapore,
Washington DC
DOI: 10.1177/0015732514525190
http://ftr.sagepub.com
Kulwinder Singh is an Assistant Professor in Centre for Economic Studies, School
of Social Sciences, Central University of Punjab, Bathinda, Punjab. E-mail: kulwinder_
bhukal@yahoo.com
Foreign Trade Review, 49, 2 (2014): 141–161
142 Kulwinder Singh
of World Trade Organization (WTO) and increasing popularity of Regional Trading
Agreements (RTAs) has provided the platform for the free movement of goods and
services among countries based on the free trade doctrine and transformed the world
into a global village. Currently, the growing Asian international production net-
works (IPNs) have a significant impact on merchandise trade patterns and regional
integration among Asian economies. The phenomenon has led to a dramatic expan-
sion in trade in parts and components with a notable development in exports by
Asia-Pacific (Anukoonwattaka and Mikic, 2011). Noticeably, target countries and
regions in India’s regional trade initiatives cover various regions of the world. In
Asia, India made a foray in RTAs with an FTA with Sri Lanka in 1998. India’s
engagement with Sri Lanka has proved to be beneficial both for India and Sri Lanka.
Subsequently, India has put in place a Comprehensive Economic Cooperation
Agreement with Singapore, an FTA with SAARC members (SAFTA) and with the
members of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic
Cooperation (BIMSTEC), a framework agreement for FTA with Thailand and a
framework agreement for Comprehensive Economic Cooperation Agreement with
ASEAN (Saraswati and Jandhyala, 2007). India’s active participation in multilateral
and regional trading agreements and changing pattern of international production
networks has provided many opportunities as well as challenges for India’s external
sector in general and for export sector in particular.
Exports occupy special attention in the economic literature and practice due to
their critical contribution to the economic stability, long-term development and
growth of any economy. The role of exports has been additionally augmented in the
contemporary context of ever increasing global competition. Export performance
is pivotal to have positive economic effects on any particular economy. A country’s
export performance is influenced by variety of domestic (internal supply) as well as
international (external demand) factors. These factors are: (1) Growth of world
demand; (2) Changes in the commodity composition of exports; (3) Changes in
market distribution of exports; (4) Changes in competitiveness of exports which
further depend on a number of factors such as export price, prices of related com-
modities, trade policies of country, non-price factors such as quality of products,
non-chemical elements, etc; and (5) The level of foreign incomes and income elas-
ticity of foreigner’s demand for goods entering the export trade of the country
(Nayyar, 1976). Since 1991, trade regime within India has experienced paramount
shift from a merely inward-oriented import substitution to outward-oriented export
promotion. Besides other growth dynamics, India’s merchandise export has wit-
nessed an exponential increase in her export earnings in the 2000s decade from
`2,03,571 crore in 2000–2001 to `11,42,922 crore in 2010–2011 and further rose to
`14,65,959 crore in 2011–2012 and her share in global exports also increased from
0.7 per cent in 2000 to 1.7 per cent in 2011. While India’s total merchandise trade as
a percentage of the gross domestic product (GDP) increased from 28.2 per cent in
2004–2005 to 43.2 per cent in 2011–2012 as per provisional estimates, India’s mer-
chandise exports as a percentage of GDP increased from 11.8 to 16.5 per cent during
the same period (Economic Survey, 2012–2013). India’s export performance was
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