Indo-kazakhstan trade : Trends and protocols in the post cold war era

Abstract

Though economic relations between India and Kazakhstan have been strengthening; still the current size of trade and investment between the two countries is relatively less than potential. In this context, the present study is an endeavour to analyze the existing trends in bilateral trade and also to highlight the future prospects for India and Kazakhstan. It has been found that the increase in merchandise trade between the two countries is mainly because of the changing demand structure and comparative advantages of both the economies in complementary sectors in recent years. The trade specialization indices (RCA and Michaely) emphasize that while Kazakhstan has been specializing in a few energy products; India's exports have been more diversified. Also, both the countries have comparative advantages in different products in the same industry, revealing the opportunity for higher intra-industry trade (IIT) in future, which would reduce cost and enhance the benefits for both the countries. However, it has been revealed that India's trade with Kazakhstan is much below than the rest of the world. Thus, there are enormous complementarities in bilateral trade that need to be tapped. It is mandatory to overcome the geographical, political and other hurdles to increase two way flow of goods. Just before fully utilizing India's potential to contribute in transition of Kazakhstan and Kazakhstan's ability to provide the energy resources to India, it is required that the process of bilateral cooperation gets a boost