Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
Examining India, Brazil and South Africa (IBSA) Trade: Trade
Intensity, Comparative Advantages and Intra-Industry Trade
Opportunities
Dr. Tsitsi Effie MUTAMBARA1
The IBSA development initiative was born in June 2003 through
the Brasilia Declaration with the countries focusing on themes on
the international agenda and those of mutual interest. One of the
objectives of the IBSA initiative is to promote intra-IBSA trade,
and this is the focus of this paper. The paper examines and
establishes trade intensity between the countries, areas of
comparative advantages, as well as intra-industry trade
opportunities. Evidence shows that the level of trade intensity is
highest between India and South Africa. Implementing proposed
trade agreements between the countries would raise trade
intensity levels further. IBSA’s comparative advantages are
mainly in products least intensive in both physical and human
capital, resource-based manufactures, with high skill- and
technology-intensive manufactures ranking third. Thus, the
countries still experience constraints in producing high
manufactured value added products which can compete
favourably in international markets and resource-based
manufacturing is still an important industrialisation strategy. While
most intra-IBSA trade is inter-industry, intra-industry trade
opportunities exist, mostly in trade between India and Brazil.
Utilising these opportunities is beneficial as it enables producing
differentiated varieties at a larger scale with increased
productivity and lower costs, which enables expansion of
industries and improving industrial performance and efficiency. It
also strengthens trade linkages more, through mutual
interdependence on differentiated products and on markets,
stimulates innovation, promotes an interchange of knowledge
about technology and joint research as firms share ideas and find
better ways of producing high technology and technologically
complex products.
Field of Research: Economics (International trade)
JEL Code: F4
1
Department of Economics and Economic History. Rhodes University P. O. Box 94. Grahamstown, 6140. Republic
of South Africa. E-mail: t.e.mutambara@ru.ac.za Tel: +27 046 603 8301.