EMPIRICAL ANALYSIS OF TRADE RELATIONS BETWEEN CHINA AND INDIA: ITS IMPACT ON ECONOMIC GROWTH

Abstract

This paper’s core objective is to examine China's and India's economic development considering their inclusion into the world economy specifically in terms of trade. We start out by going over some basic facts about their recent economic growth, the biggest institutional changes that have been made, especially regarding trade relations and how those changes have affected their economic development. We analyzed the comparison & characteristics with the patterns for said both nations to provide a brief analysis of the growth of economies, economic startups, and value of trade. We have additionally computed several econometric associations between trade openness and economic growth, incorporating as the variables under consideration such gross fixed capital formation. To analyze the causal relationships, we focused upon the fixed effects model by 2SLS. Even when we treat Openness and FDI as endogenous variables, our results are nevertheless supported since their effects on economic growth are positive and statistically significant across all parameters. The results indicate that how opening and integrating into the global market has benefited both countries' economies. Observe how the recent global crisis was initially mitigated by the strong growth of these two "giants," which is currently supporting the revival of the global economy.