Competition and cooperation in the Chinese and Indian software industries

FANG Hong1 (方虹), CHEN Xiaoyu2 (陈晓宇) and WANG Hongxia3 (王红霞)
1Professor of the School of Economics and Management of Beijing University of Aeronautics and Astronautics
2Graduate Student of the School of Economics and Management of Beijing University of Aeronautics and Astronautics
3Graudate Student of the School of Economics and Management of Beijing University of Aeronautics and Astronautics

I.Statement of issues
Trade relations between countries are either competitive or complementary by nature. The greater the similarity between two countries in export product mix and market structure, the stronger their export competitiveness becomes (Sun Lin, 2005); the more matched the major export product categories of one country are with those of the other, the more complementary to each other these two countries are in terms of trade (Yu Jinping, 2003); the more complementary the two countries are, the greater the effects of welfare enhancement from trade. There are numerous methods and criteria available for use in determining trade relationship. In 1999, Anderson conducted a comparative analysis of China and India’s agricultural product competitiveness during 1993-1995 using the two measures of 1) the revealed comparative advantage (RCA) index and 2) the net trade ratio. Anderson concludes that China no longer has comparative trade advantages in agricultural products, whereas India is well positioned for its comparative advantages in agricultural products. In 1998, Wadud calculated the revealed comparative advantage indices of textile and clothing products in China and India during 1980-1996. He found the two countries resemble each other in terms of comparative advantages in these product areas. In 1999, Wu Jianwei conducted an analysis of Chinese and Indian trade data over 1984-1995 and found neither country conducted the relatively active intra-industry trade similar to that in developed countries.