Measuring Trade Flows Between India and Latin American and Caribbean Countries: A Gravity Model Approach

Riti Srivastava, Seema Sharma & Qamar Alam

Published: September 2022

This study has been undertaken to analyse the bilateral trade flows between India and selected Latin American and Caribbean countries and the period of study is from 2001 to 2019. The trade tool used is the augmented gravity model and the study specifically covers four countries of Latin America and the Caribbean: Brazil, Colombia, Mexico and Trinidad & Tobago. The three Latin American countries were chosen because India’s trade with them is higher than with any other LAC countries, and because they offer high potential. Trinidad & Tobago is a large, well-recognised island, and offers greater potential than other Caribbean nations. We have taken export, import and total trade as dependent variables between India and each country considered, in three different equations, and a few independent and dummy variables have also been employed. The results show that GDP, GNP, per capita GDP/GNP and openness of the economy all play a very significant role in affecting bilateral trade. Also, though trade agreements do not have much effect, openness of trade and liberal trade policies are important.

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