An Analysis of Trade in the It Sector Between India and the USA

Proceedings of ‏The 4th International Conference on Business, Management and Economics

Year: 2020

DOI:

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An Analysis of Trade in the It Sector Between India and the USA

Naga Lavanya Desiraju, Prithvi Dutt

ABSTRACT: 

India is one of the fastest growing economies in the world. The USA being a capitalist friendly economy and the opening up of Indian economy through liberalisation meant that these nations have great linkages with the rest of the world. The trade between the US and India has grown steadily after the major economic reforms in the 1990s. India’s trade relationship with the US has been there since ancient times. India has become one of the major trading partners for the

USA, and the USA has also been one among the top international trading partners of India. The USA is a major free market economy in the world and India is slowly developing into an open market economy. One of the major aspects of bilateral trade between these nations is the Information Technology sector. Immigration of engineers and other tech-professionals to the US has become a longstanding trend in India, now. Hence, this paper aims at analysing the impact of the Indo-US Information technology trade on the growth of Indian GDP, and GDP per capita. This paper examines the percentage growth of India’s import-export with the USA in the time frame of about three decades, from 1992-93 to 2018-19. A static analysis as to how various policy and political changes in either of the nations have caused a change in the import- export trends has been done. The dynamic analysis consists of regression of the time series data of import-export, population, Growth of GDP in India, and the exchange rate volatility to analyse the impact of the bilateral trade on the Indian Economy. The results show that dynamism in the politics and economic well-being of nations definitely caused changes in the amount of trade. We see a strong positive correlation between Bilateral trade of India and the USA and growth of Indian GDP with the value of correlation of over 0.9.

Keywords: bilateral trade, GDP, growth of per capita GDP, regression, time series.