Figure 2. Diversification and GDP per capita, average 2001-2007
To gain further insights into the structures of China’s and India’s export baskets, we show in Tables 1 and 2 the number of products that both countries export with comparative advantage (i.e., RCA>1), according to Leamer’s (1984) classification, for the period 1960-2007.v We complement this information with Figures 3 and 4, which show the product spaces (Hidalgo et al. 2007) of the two countries in 1962 and in 2007. We mark in black the products that each country exported with RCA>1 in each year.
A few things stand out:
(i) In 1962 China exported with RCA>1 105 products, of which only 14 were “core” products.vi The bulk of the products China exported with RCA>1 were divided equally between tropical agriculture, animal products, cereals, labour intensive, and capital intensive products (excluding metals).vii By 1980, China was exporting 200 products with RCA>1, 39 of them in the core. By 2007, China exported 265 products with RCA, of which 106 were core commodities.
India, on the other hand, exported a total of 71 products with RCA>1 in 1962, only 4 were in the core. In 1962, animal products, cereals, and capital intensive products (excluding metals) accounted for more than half of the products exported with RCA>1 (44 out of 71 products). By 1980, the number of products that India exported with RCA>1 had increased to 157, 25% of which were in core products. In 2007, out of 254 products exported with RCA>1, 84 were in the core.
(ii) Over the period 1980-2007, China acquired RCA>1 in 67 core products (on a net basis). Table 1 shows that China lost RCA (where previously RCA was >1) in categories such as tropical agriculture, animal products, and cereals. The speed at which China acquired RCA>1 in the machinery category is outstanding, from 3 in 1980, to 22 in 1990, and to 60 in 2007.
India acquired RCA>1 in an additional 97 products between 1980 and 2007. Of these 97 products, 46 were in the core (6 in metal products, 16 in machinery, and 24 in chemicals).
(iii) The highest number of commodities that China exports with RCA>1 is in the labour-intensive category, followed by the machinery sector. In the case of India, on the other hand, the capital-intensive category tops the ranking of exports with RCA>1, followed by chemicals and labour-intensive. China acquired RCA>1 in 19 labour-intensive products between 1980 and 2007, while India acquired RCA>1 in only 6 products over the same period.
(iv) In China, the majority of the machinery products (39 out of 60 in 2007) exported with RCA>1 are office and data processing, telecommunications, electrical, and photographic equipment. On the other hand, in India, the largest share of the machinery products (16 out of 28 in 2007) exported with RCA>1 is taken up by the power generating, machinery specialised for particular industries, metalworking, and general industrial categories.
