Estimating Regional Trading Bloc Effect in India

This paper examines the India’s trade flows determinants. A gravity model is applied for the period 1998-2012. We selected the following major trade partners: China PRP, United Arab Emirates, United States, Saudi Arab, Switzerland, Singapore, Germany, Hong Kong, Indonesia, Iraq, Japan, Belgium, Kuwait, Korea RP, Nigeria, Australia, United Kingdom, Iran, South Africa, and Qatar. In this research we apply a panel data. We find evidence that political globalization and cultural proximity have a positive influence on bilateral trade. We also introduce economic size and common border. These proxies confirm a positive impact on bilateral trade. These results show that the gravity model can explain the pattern of bloc’s trade.