Examining the relationship between regulatory quality and forest product exports to India: A gravity model approach

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The value of aggregate forest product exports to India has increased from about $1.5 billion in 2003 to about $5.4 billion in 2013. Although many of the forest product resources can be sourced from within India, the subcontinent must also source forest products from trading partners, in the form of wood product exports. This presents many economic challenges and opportunities for wood product markets and trade, as India is the second-largest importer of wood products in the world. In this study, we focus on the effect of regulatory quality on forest products exports by partner countries to India. Using a panel of trade flows during 2009 through 2013 of 143 partner countries exporting forest products to India, we estimate an augmented gravity trade model to capture the effect of relevant variables on the outflow of aggregate forest products and disaggregate paper and paperboard, wood pulp, fiberboard, veneers, sawn wood, industrial roundwood, and plywood products from partner countries to India. Results from the analysis are mixed; regulatory quality is found to have positive correlation with exports to India in some cases (paper and paperboard products and wood pulps) and no correlation in a few instances (fiberboard, veneer sheets, sawn wood, industrial roundwood, and plywood). Other explanatory variables such as the distance between the partner country and India, forest area of partner country relative to forest area of India, gross domestic product, population, and trade agreements are mostly found to have positive or negative significant effects on trade, varying across different sectors.

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Forest Products Journal

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