Exploring Trade and Technological linkages : Evidence from India’s Sectoral GVC Participation

This paper considers India’s sectoral performance of two important manufacturing sectors- Textile & Clothing (T&C) and Electronics & Hardware (E&H), possessing varying technological capabilities and competitive trade performance from 1991 to 2017. The factors capturing trade competitiveness in the form of revealed comparative advantage and trade margins and technological capabilities/competence through global value chains participation, foreign direct inflows and R&D expenditure present a comparative performance in terms of the linkages between trade and technology. To examine both short-run and long-run time series analysis leading to cointegration and causality among the variables for these two sectors, the ARDL (autoregressive distributed lag) model is undertaken. The findings provide interesting interpretations for these sectors as for T&C there exists a long-run relationship and for E&H only short-run relationship exists among the variables. This provides direction to the policy-makers in the form of aiming well-timed and informed policies for these sectors