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Published online in Wiley Online Library (wileyonlinelibrary.com)
© 2016 Wiley Periodicals, Inc. • DOI: 10.1002/tie.21787
Correspondence to: Subhajit Chakrabarty, C202, Laxmi Ratan CHS, Building 9, Ratannagar, Four Bungalows, Andheri West, Mumbai, Maharashtra, India,
PIN: 400053, +91-9313007877 or +91-7405577788 (phone), subhajitchakrabarty@hotmail.com or subhajit.chakrabarty@nmims.edu
Determinants
and Relationships
in Sectoral Trade:
A Bilateral Model for
Knitwear Clothing
By
Subhajit Chakrabarty
Biswajit Nag
Pinaki Dasgupta
Siddhartha K. Rastogi
The generalized aggregated trade models do not capture the industry or product-specifc competitive
situation and overgeneralize the bilateral cases. As a result, product-specifc trade determinants at the
sectoral or bilateral level cannot be sufficiently drawn from such generalized models. This holds true
for knitwear clothing products, an important component of international textile trade. To remedy this,
we propose a sector-specifc bilateral model in the context of knitwear clothing exports from India to
the United States. This pair of countries is chosen due to unilateral trade fows as well as to underline
the contrasting features of developed north versus developing south. The vector autoregression (VAR)
model was found more appropriate than other available modeling choices. We used monthly frequency
data from January 2006 to December 2012. The traditional determinants such as exchange rate and
price competitiveness remain relevant. Chinese competition emerges as a signifcant determinant,
which underlines the relevance of a sector-specifc bilateral trade model.The 2009 recession showed a
FEATURE ARTICLE