Static and Dynamic Analysis of Intra-Industry Trade of BRICS Countries

Abstract

In this article, we tried to estimate Intra-Industry Trade among the BRICS countries. IIT calculated by employing Grubel and Lloyd IIT Index for static analysis and Thom and McDowell (1999) MIIT index for dynamic analysis. Additionally, the decomposition of IIT carried out to distinguish between Horizontal and Vertical IIT. The unit of analysis selected at one- digit and two-digit SITC Industry level for GL IIT index, Further, to conduct MIIT analysis, industry is defined at two-digit-SITC level data by aggregating four-digit SITC sub-industry level data of IIT of BRICS countries. Further, study analysed the Pre and Post-BRICS trade pattern of IIT. Therefore, this study emphasises that do emerging economies IIT among themselves? On the basis of estimated results of this study revealed that IIT occurs at higher level of aggregation. This signifies that developing countries are trading in the same Industry for love for variety and cost effectiveness. Hence, the empirical result contradicts conventional Krugman (1979, 1985) hypothesis of IIT trade takes place in developed nations (industrialist nations). This implies that BRICS countries should focus on opportunities of trade complementary of intermediates products. This will enhance cost effectiveness of product development or production. Further, this will promote innovation in the BRICS region. To achieve this, countries needs to conduct constructive trade dialogue among the BRICS countries.

Full text

Static and dynamic analysis
of intra-industry trade of BRICS countries
Kuldeep Kumar LOHANI
Visva-Bharati (A Central University), Santiniketan, West-Bengal, India
Indian Council of Social Science Research, New Delhi, India
lohanikuldeep@gmail.com
Abstract. In this article, we tried to estimate Intra-Industry Trade among the BRICS countries. IIT
calculated by employing Grubel and Lloyd IIT Index for static analysis and Thom and McDowell
(1999) MIIT index for dynamic analysis. Additionally, the decomposition of IIT carried out to
distinguish between Horizontal and Vertical IIT. The unit of analysis selected at one- digit and
two-digit SITC Industry level for GL IIT index, Further, to conduct MIIT analysis, industry is
defined at two-digit-SITC level data by aggregating four-digit SITC sub-industry level data of IIT
of BRICS countries. Further, study analysed the Pre and Post-BRICS trade pattern of IIT.
Therefore, this study emphasises that do emerging economies IIT among themselves? On the basis
of estimated results of this study revealed that IIT occurs at higher level of aggregation. This
signifies that developing countries are trading in the same Industry for love for variety and cost
effectiveness. Hence, the empirical result contradicts conventional Krugman (1979, 1985)
hypothesis of IIT trade takes place in developed nations (industrialist nations). This implies that
BRICS countries should focus on opportunities of trade complementary of intermediates products.
This will enhance cost effectiveness of product development or production. Further, this will
promote innovation in the BRICS region. To achieve this, countries needs to conduct constructive
trade dialog among the BRICS countries.
Keywords: intra industry trade, marginal intra industry trade, Grubel and Lloyd index, Thom and
McDowell index, BRICS.
JEL Classification: F1, F11, F15.
Theoretical and Applied Economics
Volume XXVII (2020), No. 4(625), Winter, pp. 107-130

108 Kuldeep Kumar Lohani
Introduction
Conventionally, trade takes place between the nations on the basis of comparative
advantage of a nation until 1960 e.g. Adam (1776), Ricardo (1817), Heckscher (1919)
and Ohlin (1933). From 1960s, pattern of trade has changed. This has been nicely
observed by Grubel and Lloyd (1971). In that paper, it is argued that trade takes place
between nations in similar industry. The shadow has been cleared on this finding by
consecutive papers by Krugman (1979, 1980), Helpman (1981) and Krugman and
Helpman (1985) where clearly argued that trade takes place on the basis of product
differentiation, love for variety, economies of scale, and increasing returns. The market
structure is imperfect competition. The structure of trade is intra industry or two way
trade in same industry between the nations. Further, this phenomenon was observed in
developed nation, where factor endowment, income level (i.e. per capita income) and
geographical conditions are similar. Nonetheless, this was not true for the developing
countries and the least developed countries.
In general, IIT performance measured by Grubel and Lloyd (1971) index for a year.
Where, it shows changes in trade flow in each period. Nonetheless, marginal intra-
industry trade (MIIT) index reveals changes in trade flow of IIT over/between the
period(s). In addition, MIIT is related to adjustment cost, which is indirectly related to
trade liberalization and reallocation of resources. The reallocation of resources happen
between industries (IT: inter industry) as well as within industry (IIT). It also covers
structural adjustment cost. In literature, number of studies covered adjustment cost and
employment relationship discussion. However, these issues will not discuss in details in
the present study. Here, the article will focus on IIT and MIIT in reference to BRICS
countries. Additionally, adjustment cost also reveals disequilibrium phenomena; it is
related to structure change in trade flow (exports and imports).
Further, IIT can be distinct into two parts such as horizontal (HIIT) and vertical IIT
(VIIT). HIIT defined as economies of scale where products are differentiated and
consumers choose products for product variety. Conversely, VIIT defined at the industry
level, where production process of goods is vertically integrated, whereas firms are
situated in trading partner’s countries and trade takes place on the basis of specialization
(comparative advantage) as illustrated in inter-industry trade (IT). For instance, a
component is produced in one nation and processed in another and the finished good
could be exported again, either as final good or intermediate goods. Moreover, a
computer processor produced in one nation and exported to nation two, where computer
is assembled and produced final good as computer that can be exported to nation one.
BRICS Acronyms made from Brazil, Russia, India, China and South Africa. Initially,
BRIC term coined by O’Neill (2001), where, a comparison has been made between G7
countries and BRIC countries. This was all about future leading economies in 2050. The
finding of the study suggested that the largest economy in the world would be China
followed by United States of America, India, Japan and Brazil. Consequently, it gave the
voice to forming the BRIC as a group. The term BRIC becomes BRICS after the
inclusion of South Africa in 2010, when 2nd BRICS summit held in Brazil. Overall,
BRICS accounts for 24% of the global GDP in nominal terms and in absolute figure

Static and dynamic analysis of intra-industry trade of BRICS countries 109
stands for $20.3 trillion GDP. The population size is 3.6 billion by the World Bank
database. Further, the IIT among BRICS countries stands for $33.8 billion in 2001. In 2010,
IIT was $414 billion, which increased to $675.3 billion in 2018 as per two-digit-SITC level
data, UNCOMTRADE database, 2020.
Furthermore, in this article, we tried to shed light on intra industry trade (IIT) among
developing nations such as BRICS countries, where, two-way trade analysis has been
carried out for the BRICS nations. The purpose of the study is to trace the evidence on
IIT among the BRICS countries. Further, to reach the purpose of the study, we setup
followings question: whether BRICS economies trade among themselves in the same
industry or not? If so, what level of aggregation of data (industry)? To search the answer
of these basic questions, we applied Grubel and Lloyd (1971) IIT index and marginal
intra-industry trade index as proposed by Thom and McDowell (1999). In addition, we
also distinguished IIT between horizontal and vertical IIT.
The few study tried to analyse IIT with respect to BRICS countries. For example, Proença
and Faustino (2015), Filipowicz (2016), Şahbudak and Şahin (2016), Maxir and Masullo
(2017), Mutambara (2017) and Cattaneoand Snowball (2019), Aditya and Gupta (2019)
tried to analyse IIT by GHM method with gravity model setup. On the hand, Dwesar and
Kesharwani (2019) and Varshini and Manonmani (2019) tried to apply GLI and MIIT
index. Further, Lohani (2020) analysed trade flow of BRICS countries using gravity
model and found trade creation such implies that nearly 20% of exports are above the
normal level in the bloc since inception of BRICS bloc. In addition, Kubendran (2020)
also applied gravity model of trade for BRICS countries. However, did not focus on IIT.
Thus, present study tried to fill the gap and present study prompts.
This organisation of the paper is in followings sequence i.e. Introduction, Review of
Literature, Methodology, Results; Discussion and Conclusion and Policy Implications.
Review of literature
Traditionally, trade takes place on basis of comparative advantage. This was argued by
classical economist i.e. Adam (1776), Ricardo (1817), etc. Thereafter, neoclassical
economist said trade takes place on the basis of factor abundance and specialisation i.e.
Heckscher (1919) and Ohlin (1933). Finally, new trade theorist said trade takes place on
account of product differentiation, love for variety, consumer preference, economies of
scale and increasing returns to scale in the same industry i.e. Krugman (1979, 1980), Eaton
and Kierzkowski (1984), Kierzkowski (1989). To verify this argument, next sub-sections
will discuss recent empirical studies related to IIT. Further, Balassa (1979), Falvey and
Kierzkowski (1987) argued that economies with less trade barriers have larger levels of IIT.
Static intra-industry trade
The first attempt to analyse the IIT has been made by Grubel and Lloyd (1971) analysed
intra-industry trade at three digit SITC level of aggregation of data of nine OECD

110 Kuldeep Kumar Lohani
member countries. The empirical evidence revealed that IIT taking place below the three
digits SITC level of aggregation between Australia and other OECD countries. IIT
mainly taking place in primary goods or processed manufacture goods. Further, Casson
and Pearce (1988) discussed intra-firm trade and its four factors i.e. propensity to:
circulate, trade, internalise, and the composition of final output that affect intra-firm trade
and related to horizontal product differentiation as well. In addition, multinational
enterprise may exploit opportunities by horizontal differentiation of products. For
instance, Japanese production would have benefited and developing nations as well. This
leads to intermediate products inflowing into intra-firm trade and developing countries
surely going to gain from it. Furthermore, Islam (2018) analysed Bangladesh and India
trade flow by using RCA and GLI for inter-industry trade and IIT respectively at HS two
digit level of disaggregation. The results showed that India has comparative advantage in
more than 10 products whereas Bangladesh has comparative advantage in 8 products
exports. IIT is in mostly in oil/mineral fuels and cotton industry and the magnitude was
very low i.e. 16% and 4% respectively. Boyrie and Kreinin (2011) estimated GLI for IIT
and analysis was concentrated on inter-industry trade of manufacturing products from
five to eight digits SITC level data, and then aggregated in the four digit classification.
Further, the analysis carried out at nation’s total trade and bilateral trade as well. The
estimated results illustrate that IIT is huge among OECD nations, whereas IIT largely
taking place from North to South and South to South region.
Dynamic intra-industry trade
The pioneer attempt has been made by Brulhart (1994), tried to analyse dynamic
approach of GLI, which is considered as static method to analyse IIT. This study
proposed MIIT (marginal IIT) index to examine trade flow including adjustment costs.
Another limitation of GLI was that the dynamic adjustment factors including the sectoral
and geographical distribution benefit could not able to capture. Further, the Irish
chemicals sector was analysed between 1985 and 1990 period. The study concluded that
single indicator is not enough to state all crucial information; hence, a multi-stage
evaluation may the only practicable way out. Further, Thom and McDowell (1999)
estimated marginal intra-industry trade (MIIT) in light of trade liberalisation and
structural adjustment costs. Where, point out that the Briilhart (1994) MIIT index was
able to measure only horizontal IIT, which lead to overestimation of adjustment cost,
thus, study introduced new measure of MIIT such as dynamic MIIT by combining of
Brulhart's index and the aggregate index as suggested in that study. Consequently, VIIT is
the difference of two measures i.e. residual of two indices. This was estimated for the
trade flows between the EU and three Central and Eastern Europe countries. Further, the
study suggested that if we avoid the distinction between vertical IIT and inter industry
trade leads to risk of underestimating the level of IIT and, ceteris paribus. Another study
by Al-Mawali (2006) examined country-specific factors of VIIT and HIIT in South
Africa employing the panel gravity model of trade. Three types of econometric model
have been applied. Conventional assumptions of the gravity model and IIT have been
found true in case of South Africa. However, geographical distance is inversely related to

Static and dynamic analysis of intra-industry trade of BRICS countries 111
IIT. Further, Jing (2009) analysed data on HS two digit up to 24 chapters related to
agriculture trade of China. The indices were computed such as GLI, Brülhart marginal IIT
index, and Thom and McDowell marginal IIT index during 1996-2005. Results were
found that agricultural IIT is considerably low, and Brülhart index shown that IIT
improving over the decades, Thom and McDowell index revealed that gain from trade
was mostly coming from growth of VIIT.
Studies on BRICS bloc
Proença and Faustino (2015) examined IIT including HIIT and VIIT with respect to
Portugal and the BRIC countries, the European Union, and the five Portuguese-speaking
African countries. Further, the semi parametric gravity model methods have been applied
to control for unobserved heterogeneity. The sample size consists 38 countries and for the
period of 1995-2006. The outcome of empirical model showed that misspecification
assumption of the parametric model has been corrected by the present approach. IIT has
been adversely affected by distance and the effect of economic integration on IIT found
inconclusive. BRIC economies trade in similar quality of goods. Additionally, IIT is
inversely affected by GDP per capita difference between the trading partners. Further,
Filipowicz (2016) analysed the Russian Federation RTAs with reference to global value
chains (GVCs). This study covered India, China, South Africa, Mexico and Russia
Federation and concluded that favourable RTA must be decided by structure of GVCs of
respective country. Furthermore, Şahbudak and Şahin (2016) analysed IIT in agriculture
products between China and Brazil during 2000-2014. In order to analyse IIT, Grubel-
Lloyd Index (GLI), HIIT and VIIT have been computed at SITC three digit level of
aggregation. The study revealed that IIT in agriculture product is very low and low
quality of VIIT taking place between China and Brazil. Moreover, Maxir and Masullo
(2017) examined Brazil’s trade in forest products for the period of 2000-2014. The RCA
and GL indices have been measured to determine IIT and IT. The results found that
Brazil has comparative advantage (CA) in fuel wood, wood panels, wood floors, wood
articles and wood pulp and imports very low volume of wood and paper. Another study
by Mutambara (2017) examined South Africa’s trade relations with conventional trading
partners and with China as well. The methods were used such as the factor intensities of
goods traded, trade intensity with each country, ease of market access of its products, and
IIT opportunities during 2001-2015. Results infer that China is top trading partner of
South Africa. South Africa’s trade with China is purely complimentary in comparison to
conventional trading partners. China is a market mostly for non-fuel primary
commodities for South Africa, whereas the conventional trade partners gives markets for
both low value and high value added products and further scope for IIT to South Africa.
In addition, South Africa conventional comparative advantages are in low value added
products primary commodities such as non fuel primary commodities and minerals and
mineral fuels. In addition, Cattaneo and Snowball (2019) analysed trade in cultural and
creative industries of South Africa with BRICS countries and results found that South
Africa has trade deficit in cultural good with China and India during 2008-2016. On the
other hand, South Africa trade in cultural goods with Russia shows surplus. Moreover,

112 Kuldeep Kumar Lohani
crafts and audio-visual sectors are reducing significant trade deficit. Further, study
suggested that trade preferences favoured SADC, the EU and EFTA above BRICS
partners. Further, Dwesar and Kesharwani (2019) examined the magnitude of IIT between
India and China using Brülhart weighted marginal IIT A-Index during 1999-2018. Further,
the study covered data on HS two digit i.e. 99 commodities and compared decade-wise
IIT performance. The evidence was found that India exports to China raw-materials and
some semi-finished goods. While China’s exports to India primary products and
secondary manufactured goods. Percentage share of IIT in total trade are ranging from
10% to 20% over the years. Lastly, Varshini and Manonmani (2019) analysed trade
advantage of Indian pharmaceutical industry 2000-2014. The methods were used i.e.
Marginal Intra-Industry Trade, Horizontal and Vertical Intra-industry, Balassa Revealed
Comparative Advantage (RCA), Revealed Symmetric Comparative Advantage,
Normalized RCA, and Vollrath’s Trade Advantage indices were estimated. The empirical
results revealed that intra-industry trade taking place at the higher level. However,
comparative disadvantage has been observed for this industry. In addition, India exports
high quality of pharmaceutical products to the world.
Other methods
Caporale et al. (2015) analysed Chinese trade flows and trade specialisation using gravity
model of trade from 1992-2012. The analysis consists major trading partners from Asia,
Europe and North America and fixed effect vector decomposition model has been used to
estimate gravity model. The empirical results revealed that there is a change in structure
of foreign trade of China specifically to paradigm shift from resource – and labour-
intensive to capital – and technology-intensive exports has been observed. Further, In
addition, Konno (2016) estimated inter industry trade and IIT including HIIT and VIIT
for Russian trade flow with major trading partners. Thereafter, determinants of IIT have
been analysed by using log- linear gravity model of trade for the period of 2000-2013.
The feasible generalised lest square, fixed effect and random effect econometric model
have been estimated. The results were found that conventional assumptions of gravity
model are valid for Russia. In addition, FTA, FDI and Commonwealth Independent
States/Customs Union membership positively influencing trade of Russia. Nonetheless,
distance is adversely affecting trade flow. Furthermore, Marzábal et al. (2016) analysed
performance of IIT between EU and Latin America with reference to Brazil and Mexico
and studied the factors affecting trade and foreign direct investment. Study also focused
on input-output framework. In addition, Mhaka and Jeke (2018) analysed trade
performance between South Africa and China during 1995-2014. The OLS method has
been used to analyse bilateral trade flow, economic size, population or market size, and
exchange rate of respective countries. The result showed that economic size positively
affecting trade whereas exchange rate is inversely related to trade flow. Aditya and Gupta
(2019) examined India’s IIT specifically to decomposition of IIT into horizontal and
vertical trade. It analysed by using Greenaway-Hine-Milner and support vector machines
method. The results of both the method have been compared and contrasted during
1978-2013 at SITC 5 digit level of data aggregation. The results showed that India’s trade

Static and dynamic analysis of intra-industry trade of BRICS countries 113
is horizontal IIT. However, vertical IIT are increasing in comparison to horizontal IIT
over the period. In addition, the industry wise analysis namely bakery industry,
phosphorus industry, aluminium industry results revealed that is horizontal IIT. Chin et
al. (2019) computed IIT decomposing into HIIT and VIIT and analysed VIIT and
economic size for the Malaysian economy for the period of 1988-2016. The study
covered Malaysia’s trade with its top trading partners and panel vector autoregression
method used for data analysis. The results revealed that positive bidirectional causality
relationship exist between VIIT and economic size and trade-led growth hypothesis is
valid in case of Malaysia. Lastly, Brodzicki et al. (2020) examined factors affecting VIIT
and HIIT of Spain and Poland employing gravity model of trade estimated by fixed effect
and PPML models from 2005-2014. The factors were included such as convention factors
of standard gravity model of trade including various indicators of trade cost, regional
factors and FDI. The study formulated hypothesis based on economic theory and most of
them found true and some them were false.
The purpose of this study is to know the BRICS bloc formation effect on IIT of BRICS
countries. However, after reviewing the literature, we did not find ample of evidence on
IIT and MIIT analysis specific to IIT of BRICS countries. Very few study tried to analyse
IIT with respect to BRICS countries. For example, Proença and Faustino (2015),
Filipowicz (2016), Şahbudak and Şahin (2016), Maxir and Masullo (2017), Mutambara
(2017) and Cattaneoand Snowball (2019) tried to analyse IIT with gravity model setup
and GHM method. On the other hand, Aditya and Gupta (2019), Dwesar and Kesharwani
(2019) and Varshini and Manonmani (2019) tried to apply GLI and MIIT index. Thus,
present study tried to fill the gap and present study prompts. The next section will
elaborate on methodology of this study.
Methodology
The Intra Industry Trade is measured by following methods: The pioneer attempt made
by Grubel and Llyod (1971) to measure IIT. Thus, it usually known as Grubel and Llyod
Index (hereinafter referred to as GLI). The GLI is calculated by:
GLIx = 1- ||
  (1)
Where, E stands for export of x country to y country in the similar industry and M stands
for import of x country from y country in the similar industry. Subscript x and y is country
name. The index values remain within zero and one or 0 GLI 1. The index explains that
if GLI =1, it implies that country’s IIT is very high with respect to trading partner.
Conversely, If GLI = 0, this implies that country’s trade in the inter industry only. The other
classification of values of GLI is following: if GLI  .25, it infers that IIT is low, if .25
GLI  .5 it implies that IIT is in lower level; further, when, GLI values lies between .75
and 1 or .75 GLI 1, this reveals that IIT is high in the trade flow.
Marginal Intra Industry Trade index (MIITI): This is measured by Brulhart (1994). The
MIITI uses to analyse the dynamic aspects of IIT. Whereas, GLI was unable to captured

114 Kuldeep Kumar Lohani
and considered as static analysis. Nonetheless, Brulhart (1994) was able to calculate only
HIIT or IIT in similar products in the same industry. Therefore, this study uses Thomand
and McDowell (1999) approach because it is more comprehensive. Additionally, this
approach uses aggregate of all sub-IIT and present IIT at industry level. Further, also,
able to differentiate IIT between HIIT and VIIT at industry level. The definition of VIIT
and HIIT defers from GHM approach. In this case, trade in different sub sector in the
same industry or sector called as VIIT e.g. trade in computer and computer parts or
assembly and trade in similar product of the same sector or industry defined as HIIT.
Furthermore, inter industry is calculated as residual form total trade. The equation (3)
illustrate Briilhart (1994) unweighted MIITI for ‘s’ industry. To measure MIIT at sub
sector, equation (4) formed as suggested by Briilhart (1994), where Aw denotes weighted
MIITI for ‘s’ industry; W denotes a weight that is calculated by
As = 1- |∆∆|
|∆| |∆| (3)
As value lies between zero and one, where, As = 0 implies that pure inter-industry trade
(IT) and As =1 refers to high degree of IIT. If the values of As remain between 0 and .5
or 0  MIITI .5, this implies that MIIT at high level.
Aw = ∑𝑊
𝐴

 (4)
The equation (4) is weighted MIITI and calculated at sub-industry level and aggregate
sub industry’s calculated value by multiplying weighted value to get equation (4) give
aggregate MIITI at industry level.
Ws= |∆||∆|
∑|
∆| |∆|

 (5)
To estimate Thomand and McDowell (1999) aggregate approach, the equation (6) would
be estimated. The equation (6) also written as equation (7). Furthermore, to decompose
total trade flow, the differentiation of IIT have been done by computing Aw, it reveal IIT
then computing (As - Aw) denotes VIIT and finally, to get IT (1- As).
As = 1- |∆∆|
∑|
∆|

 ∑|
∆|

 (6)
Ai = 1- |∆∆|
|∆| |∆| (7)
Eq. 7 is weight index suggested by Briilhart (1994) for As. MIITI measures the trade
direction and structure of changes between distinct time periods. In other words, it
measures the gap between change in total export and import and change in net trade. This
also captures the adjustment process of IIT. This was not possible to trace by GLI
method. Further, When, As reveals positive value and closer to one, implies that sectoral
trade is converging trend and shows predominance of MIIT in the adjustment process.
Nonetheless, if As shows negative value, this implies that divergence trend in sectoral
trade flows, while other thing remaining constant, leads to greater transitional adjustment
costs. The next section will describe results of the study.

Static and dynamic analysis of intra-industry trade of BRICS countries 115
Empirical results
Static IIT analysis
The GLI results of BRICS countries are presented in Tables 1-6 on one digit-SITC level
data and Tables 7-9, reports GLI results for the year 2001, 2010 and 2018 at two-digit
SITC level data. The year 2001 depicts pre-BRICS scenario, year 2010 shows at the time
of BRICS formation level of IIT prevailing among the BRICS countries and year 2018
reveals post-BRICS IIT performance. Further, Brazil’s IIT with BRICS countries are in
followings sectors: IIT with China is at low level only in [6] manufacture goods over the
period; IIT with India is at low level in [6] manufacture goods and [7] Machinery and
transport equipment; IIT with Russia is low in [2] Crude materials, inedible, except fuels,
and [8] miscellaneous manufactured articles; and IIT with South Africa is high in [1]
Beverages and tobacco, [2] Crude materials, inedible, except fuels, [3] Mineral fuels,
lubricants and related materials, [5] Chemicals and related products, n.e.s., and [6]
Manufactured goods. Overall, Brazil’s IIT takes place with BRICS countries mostly in
[6] manufacture goods and [3] Crude materials, inedible, except fuels (Table 1).
Table 1. Brazil’s IIT with BRICS Countries at SITC-One Digit Data Level
BRAZIL CHINA INDIA
RUSSIA
SOUTH AFRICA
PRODUCT 2001 2010 2018 2001
2010
2018
2001
2010
2018
2001 2010 2018
A
LL 0.82 0.91 0.70 0.69
0.90
0.97
0.59
0.63
0.66
0.81 0.73 0.65
0 0.50 0.64 0.21 0.23
0.03
0.12
0.03
0.00
0.04
0.07 0.02 0.02
1 0.00 0.00 0.04 NA
0.09
0.20
0.01
0.01
0.03
0.24 0.25 0.52
2 0.02 0.01 0.01 0.14
0.16
0.18
0.15
0.74
0.47
0.60 0.64 0.93
3 0.48 0.10 0.04 0.00
0.80
0.17
0.00
NA
0.00
1.00 0.12 0.94
4 0.03 0.00 0.02 0.00
0.29
0.08
NA
NA
NA
0.00 0.01 0.06
5 0.25 0.25 0.20 0.21
0.34
0.29
0.04
0.04
0.03
0.75 0.69 0.60
6 0.85 0.43 0.51 0.72
0.54
0.34
0.14
0.12
0.23
0.48 0.63 0.85
7 0.74 0.10 0.04 0.86
0.55
0.55
0.78
0.45
0.12
0.13 0.32 0.09
8 0.06 0.02 0.03 0.83
0.26
0.26
0.09
0.95
0.25
0.18 0.27 0.32
9 NA 0.00 0.00 NA
NA
NA
NA
NA
0.00
NA 0.75 NA
Source: Author own calculation based on UNCTAD database accessed on 02/02/2020.
Table 2. China’s IIT with BRICS Countries at SITC-One Digit Data Level
CHINA BRAZIL
INDIA
RUSSIA
SOUTH AFRICA
PRODUCT 2001 2010 2018 2001
2010
2018
2001
2010
2018
2001 2010 2018
A
LL 0.73 0.78 0.58 0.95
0.68
0.42
0.51
0.93
0.86
0.94 0.84 0.71
0 0.55 0.55 0.29 0.42
0.70
0.92
0.52
1.00
0.97
0.81 0.59 0.87
1 0.00 0.01 0.03 0.17
0.12
0.50
0.01
0.17
0.63
0.06 0.92 0.43
2 0.01 0.01 0.01 0.51
0.07
0.27
0.08
0.05
0.05
0.10 0.03 0.02
3 0.00 0.14 0.05 0.25
0.87
0.53
0.12
0.03
0.01
0.53 0.27 0.90
4 0.12 0.00 0.02 0.22
0.03
0.03
0.57
NA
0.04
0.46 0.30 0.33
5 0.56 0.37 0.28 0.80
0.30
0.36
0.14
0.71
0.82
0.99 0.54 0.39
6 0.86 0.48 0.74 0.85
0.54
0.80
0.26
0.73
0.80
0.86 0.71 0.61
7 0.63 0.11 0.22 0.28
0.08
0.09
0.22
0.06
0.09
0.38 0.05 0.02
8 0.11 0.02 0.02 0.51
0.18
0.14
0.17
0.01
0.03
0.02 0.02 0.03
9 NA 0.01 0.00 0.16
0.46
NA
0.00
0.65
NA
0.01 0.00 NA
Source: Author own calculation based on UNCTAD database accessed on 02/02/2020.

116 Kuldeep Kumar Lohani
Table 3. India’s IIT with BRICS Countries at SITC-One Digit Data Level
INDIA BRAZIL
CHINA
RUSSIA
SOUTH AFRICA
PRODUCT 2001 2010 2018 2001
2010
2018
2001
2010
2018
2001 2010 2018
A
LL 0.80 0.98 0.89 0.57
0.58
0.35
0.98
0.46
0.47
0.46 0.82 0.82
0 0.42 0.03 0.10 0.51
0.65
0.44
0.01
0.09
0.25
0.22 0.14 0.45
1 0.02 0.17 0.15 0.12
0.29
0.82
0.00
0.00
0.04
0.30 0.03 0.43
2 0.13 0.14 0.15 0.95
0.11
0.50
0.32
0.23
0.43
0.21 0.12 0.05
3 0.05 0.86 0.19 0.01
0.79
0.56
0.01
0.01
0.01
0.00 0.78 0.34
4 0.02 0.21 0.06 0.17
0.05
0.09
0.00
0.35
0.81
0.51 0.37 0.02
5 0.33 0.45 0.36 0.63
0.30
0.44
0.98
0.49
0.95
0.42 0.66 0.33
6 0.89 0.61 0.42 0.56
0.79
0.42
0.48
0.20
0.22
0.88 0.70 0.99
7 0.62 0.63 0.50 0.12
0.05
0.07
0.28
0.89
0.78
0.90 0.09 0.20
8 0.92 0.28 0.26 0.38
0.13
0.15
0.36
0.28
0.81
0.11 0.06 0.17
9 0.60 0.10 0.00 0.91
0.02
0.01
0.07
0.12
0.00
0.02 0.01 0.00
Source: Author own calculation based on UNCTAD database accessed on 02/02/2020.
China’s IIT with BRICS countries are in sectors such as IIT with Brazil is at high level
only in [6] manufacture goods and in the low level in [0] Food and live animals and [5]
Chemicals and related products, n.e.s. over the period; IIT with India is in high level in
[6] manufacture goods and at low level in [0] Food and live animals[5] Chemicals
and related products, n.e.s.; IIT with Russia is high level in [0] Food and live animals,
[6] manufacture goods and [5] Chemicals and related products, n.e.s. and at low level in
[1] Beverages and tobacco over the period; and IIT with South Africa is high in [0] Food
and live animals and [3] Mineral fuels, lubricants and related materials, and at low level in
[1] Beverages and tobacco, [4] Animal and vegetable oils, fats and waxes, [5] Chemicals
and related products, n.e.s., and [6] Manufactured goods. Overall, China IIT does with
BRICS countries mostly in [6] manufacture goods and [5] Chemicals and related
products, n.e.s. (Table 2).
Further, India’s IIT with BRICS countries are in sectors like: IIT with Brazil is at low level
only in [7] Machinery and transport equipment and at the lowest level in [5] Chemicals and
related products, n.e.s., [6] manufacture goods and [8] Miscellaneous manufactured articles
over the period; IIT with China is at high level in [1] Beverages and tobacco and at low
level [2] Crude materials, inedible, except fuels, [3] Mineral fuels, lubricants and related
materials, [5] Chemicals and related products, n.e.s., and [6] Manufactured goods; IIT with
Russia is at high level in [4] Animal and vegetable oils, fats and waxes, [5] Chemicals and
related products, n.e.s., [7] Machinery and transport equipment, and [8] Miscellaneous
manufactured articles, and at the lowest level in [0] Food and live animals, and [2] Crude
materials, inedible, except fuels, over the years and IIT with South Africa is high in [6]
Manufactured goods, and at lowest level in [0] Food and live animals, [1] Beverages and
tobacco, [3] Mineral fuels, lubricants and related materials, and [5] Chemicals and related
products, n.e.s.. Overall, India doses IIT with BRICS countries mostly in [6] manufacture
goods and [5] Chemicals and related products, n.e.s., [7] Machinery and transport
equipment and [3] Mineral fuels, lubricants and related materials (Table 3).
Table 4. Russia’s IIT with BRICS Countries at SITC-One Digit Data Level
RUSSIA BRAZIL
CHINA
INDIA
SOUTH AFRICA
PRODUCT 2001 2010 2018 2001
2010
2018
2001
2010
2018
2001 2010 2018
A
LL 0.29 0.58 0.88 0.62
0.74
0.96
0.83
0.48
0.52
0.24 0.23 0.67
0 NA 0.00 0.02 0.69
0.80
0.93
0.01
0.03
0.16
0.00 NA 0.79
1 0.00 0.01 0.01 0.01
0.10
0.95
0.00
0.00
0.01
NA NA 0.00
2 0.63 0.27 0.35 0.10
0.07
0.08
0.94
0.41
0.57
0.56 0.11 0.21

Static and dynamic analysis of intra-industry trade of BRICS countries 117
RUSSIA BRAZIL
CHINA
INDIA
SOUTH AFRICA
PRODUCT 2001 2010 2018 2001
2010
2018
2001
2010
2018
2001 2010 2018
3 0.00 0.00 0.00 0.22
0.04
0.01
0.02
0.02
0.01
NA 0.25 0.04
4 NA NA NA 0.28
0.01
0.03
0.00
0.47
0.78
NA 0.01 NA
5 0.10 0.04 0.04 0.22
0.90
0.52
0.88
0.58
0.94
0.88 0.94 0.67
6 0.40 0.26 0.72 0.51
0.24
0.36
0.50
0.29
0.32
0.65 0.37 0.93
7 0.97 0.89 0.15 0.69
0.14
0.14
0.17
0.67
0.61
0.39 0.15 0.46
8 0.10 0.52 0.27 0.23
0.02
0.03
0.64
0.30
0.78
0.24 0.21 0.84
9 NA 0.63 0.60 0.00
0.16
0.00
0.03
0.07
0.00
0.95 0.00 0.00
Source: Author own calculation based on UNCTAD database accessed on 02/02/2020.
Russia’s IIT with BRICS countries are in followings sectors: IIT with Brazil is high only
in [6] manufacture goods and the lowest in [2] Crude materials, inedible, except fuels,
and [8] Miscellaneous manufactured articles over the period; IIT with China is at high
level in [0] Food and live animals, and [1] Beverages and tobacco and low level in [5]
Chemicals and related products, n.e.s., and [6] Manufactured goods; IIT with India is
high level in [4] Animal and vegetable oils, fats and waxes, [5] Chemicals and related
products, n.e.s., and [8] Miscellaneous manufactured articles, and the low level in [7].
Machinery and transport equipment, [2] Crude materials, inedible, except fuels, and [6]
Manufactured goods, over the years and IIT with South Africa is very high in [0] Food
and live animals, [6] Manufactured goods, and [8] Miscellaneous manufactured articles
and the low level in [5] Chemicals and related products, n.e.s. and [7] Machinery and
transport equipment. Overall, Russia does IIT with BRICS countries mostly in [6]
manufacture goods and [5] Chemicals and related products, n.e.s. [8], Miscellaneous
manufactured articles (Table 4).
Table 5. South Africa’s IIT with BRICS Countries at SITC-One Digit Data Level
SOUTH AFRICA BRAZIL CHINA
INDIA
RUSSIA
PRODUCT 2001 2010 2018 2001
2010
2018
2001
2010
2018
2001 2010 2018
A
LL 0.56
0.68 0.48 0.60
0.83
0.67
0.80
0.97
0.93
0.85 0.55 0.88
0 0.05
0.03 0.02 0.48
0.50
0.74
0.36
0.16
0.36
0.12 0.00 0.98
1 0.49
0.30 0.39 0.14
0.91
0.09
0.23
0.05
0.75
0.05 0.01 0.01
2 0.91
0.62 0.68 0.17
0.04
0.04
0.25
0.10
0.06
0.74 0.16 0.31
3 0.01
0.20 0.81 0.27
0.37
0.15
0.22
0.63
0.30
0.13 0.22 0.01
4 NA
NA 0.02 0.00
0.35
0.23
0.03
0.00
0.02
NA 0.01 NA
5 0.79
0.71 0.84 0.54
0.51
0.17
0.49
0.81
0.36
0.04 0.14 0.16
6 0.90
0.79 0.79 0.88
0.86
0.63
0.98
0.78
0.77
0.42 0.72 0.38
7 0.30
0.54 0.17 0.31
0.04
0.01
0.89
0.21
0.24
0.47 0.47 0.99
8 0.48
0.43 0.32 0.01
0.01
0.07
0.13
0.11
0.12
0.36 0.97 0.92
9 0.00
0.00 0.00 0.04
0.00
0.00
0.57
0.01
0.00
0.88 NA 0.02
Source: Author own calculation based on UNCTAD database accessed on 02/02/2020.
South Africa does IIT with BRICS countries in the sectors like: IIT with Brazil is high in
[3] Mineral fuels, lubricants and related materials, [5] Chemicals and related products,
n.e.s., and [6] Manufactured goods, and the lowest in [1] Beverages and tobacco, [2] Crude
materials, inedible, except fuels, and [8] Miscellaneous manufactured articles over the
period; IIT with China is high in [0] Food and live animals, and [6] Manufactured goods;
IIT with India is high level in [6] Manufactured goods, and [1] Beverages and tobacco
and the low level in [0] Food and live animals, [3] Mineral fuels, lubricants and related
materials, and [5] Chemicals and related products, n.e.s., over the years and IIT with
Russia is very high in [0] Food and live animals, [7] Machinery and transport equipment,
and [8] Miscellaneous manufactured articles and the low level in [6] Manufactured goods

118 Kuldeep Kumar Lohani
and [2] Crude materials, inedible, except fuels,. Overall, South Africa’s IIT does with BRICS
countries largely in [0] Food and live animals, [6] manufacture goods and [5] Chemicals
and related products, n.e.s., [2] Crude materials, inedible, except fuels, [3] Mineral fuels,
lubricants and related materials, [8] Miscellaneous manufactured articles (Table 5).
Table 6. Overall BRICS Countries’ IIT with BRICS Countries at SITC-One Digit Data Level
BRICS BRAZIL CHINA INDIA
RUSSIA
SOUTH AFRICA
PRODUCT 2001 2010 2018 2001 2010
2018
2001
2010
2018
2001
2010
2018
2001 2010 2018
A
LL 0.84 0.91 0.82 0.48 0.68
0.94
0.67
0.63
0.43
0.79
0.80
0.92
0.71 0.86 0.75
0 0.06 0.14 0.17 0.53 0.84
0.69
0.24
0.82
0.82
0.13
0.29
0.76
0.57 0.57 0.76
1 0.05 0.17 0.10 0.38 0.18
0.19
0.04
0.13
0.29
0.00
0.02
0.33
0.96 0.45 0.63
2 0.04 0.03 0.03 0.15 0.03
0.03
0.84
0.31
0.97
0.16
0.20
0.31
0.24 0.08 0.08
3 0.29 0.64 0.13 0.73 0.11
0.07
0.02
0.90
0.68
0.22
0.04
0.01
0.57 0.57 0.47
4 0.00 0.03 0.07 0.20 0.01
0.03
0.21
0.57
0.87
0.00
0.47
0.10
0.00 0.22 0.05
5 0.21 0.25 0.20 0.60 0.77
0.42
0.78
0.46
0.62
0.38
0.70
0.94
0.94 0.71 0.31
6 0.73 0.43 0.45 0.33 0.93
0.91
0.68
0.79
0.49
0.51
0.52
0.60
0.96 0.86 0.65
7 0.91 0.18 0.11 0.31 0.71
0.11
0.28
0.25
0.18
0.54
0.26
0.24
0.35 0.10 0.05
8 0.18 0.06 0.05 0.47 0.80
0.06
0.67
0.29
0.31
0.31
0.12
0.09
0.04 0.02 0.08
9 N
A
0.02 0.00 0.01 0.03
0.00
0.05
0.03
0.00
0.01
0.12
0.00
0.09 0.00 0.00
Source: Author own calculation based on UNCTAD database accessed on 02/02/2020.
BRICS Countries’ IIT with BRICS countries are in followings sectors: IIT with Brazil is
low in [6] Manufactured goods, over the period; IIT with China is high in [6] Manufactured
goods and the low level in [0] Food and live animals, and [5] Chemicals and related
products, n.e.s.; IIT with India is high level in [0] Food and live animals, [2] Crude
materials, inedible, except fuels and [4] Animal and vegetable oils, fats and waxes, and
the low level in [5] Chemicals and related products, n.e.s., [6] Manufactured goods, and
[3] Mineral fuels, lubricants and related materials, In addition, the lowest level IIT is in
[1] Beverages and tobacco and [8] Miscellaneous manufactured articles, over the years;
IIT with Russia is high in [0] Food and live animals, and [5] Chemicals and related
products, n.e.s., the low level IIT is in [6] Manufactured goods and the lowest level of IIT
is in [1] Beverages and tobacco and[2] Crude materials, inedible, except fuels; and IIT with
South Africa is very high in [0] Food and live animals, the low level IIT is in [1] Beverages
and tobacco, [6] manufacture goods and the lowest level of IIT is in [5] Chemicals and
related products, n.e.s., and [3] Mineral fuels, lubricants and related materials. Overall, BRICS
IIT with BRICS countries take place mostly in [0] Food and live animals, [6] manufacture
goods and [5] Chemicals and related products, n.e.s., [2] Crude materials, inedible, except
fuels, [3] Mineral fuels, lubricants and related materials (Table 6).
Table 7. Overall BRICS Countries’ IIT with BRICS Countries at SITC-Two Digit Data Level in 2001
Country Name Partner Country Name
0-0.25
0.25-0.5
0.5-0.75
0.75-1
Total No. of Industry
Brazil
China 28
13
5
3
49
India 13
6
6
9
34
Russian Federation 8
3
2
13
South
A
frica 14
9
7
6
36
China
Brazil 28
10
6
3
47
India 21
8
15
5
49
Russian Federation 22
9
3
7
41
South Africa 28
5
5
7
45
India
Brazil 11
13
4
6
34
China 26
7
7
11
51
Russian Federation 11
7
4
7
29
South Africa 21
10
4
5
40

Static and dynamic analysis of intra-industry trade of BRICS countries 119
Country Name Partner Country Name
0-0.25
0.25-0.5
0.5-0.75
0.75-1
Total No. of Industry
Russian Federation
Brazil 9
2
3
2
16
China 24
11
5
10
50
India 16
9
4
1
30
South Africa 6
4
2
1
13
South Africa
Brazil 15
10
6
8
39
China 33
2
5
8
48
India 23
10
7
7
47
Russian Federation 10
5
3
2
20
Source: Author own calculation based on UNCOMTRADE database using WITS accessed on 02/04/2020.
The results on two digit-SITC data have been reported in Tables 7-9. It shows distribution
of indices’ value of IIT of BRICS countries for the years such as 2001, 2010 and 2018.
Further, the three years represents pre-BRICS 2001, at the BRICS formation-2010 and
post-BRICS formation-2018. Furthermore, the analysis revealed that IIT at two industry
level expanded over the period. This is clearly shown by three different year analysis (see
Tables 7-9). However, the high level of IIT performance has observed in the nearly in
single digit over the years of the analysis. Further, the results and break down high IIT
indices have been reported and discussed in next paragraph. For instance, in 2001,
Brazil’s IIT with BRICS countries at two-digit SITC chapters are high in followings
industries: IIT with China in [9] Misc food products (0.81), [66] Non-metal mineral
manuf. (0.95), and [72] Industry special machine (0.86); IIT with India in [59] Chem
material/prods n.e.s. (0.95), [66] Non-metal mineral manuf. (0.85), [67] Iron and steel
(0.93), [72] Industry special machine (1.00), [73] Metalworking machinery (0.75), [74]
Industrial equipment n.e.s. (0.90), [81] Building fixtures etc. (0.80), [82] Furniture/
furnishings (0.98), and [89] Misc manufactures n.e.s. (0.85); and IIT with South Africa in
[29] Crude anim/veg mater n.e.s. (0.97),[54] Pharmaceutical products (0.77), [64] Paper/
paperboard/article (0.95), [69] Metal manufactures n.e.s. (0.79), [73] Metalworking
machinery (0.90), and [76] Telecomms etc. equipment (0.85).
Table 8. Overall BRICS Countries’ IIT with BRICS Countries at SITC- Two Digit Data Level in 2010
Country Name Partner Country Name
0-0.25
0.25-0.5
0.5-0.75
0.75-1
Total No. of Industry
Brazil
China 38
7
5
3
53
India 35
4
1
4
44
Russian Federation 17
1
5
2
25
South Africa 18
8
10
3
39
China
Brazil 35
8
5
3
51
India 34
6
7
7
54
Russian Federation 42
2
7
2
53
South Africa 38
5
4
5
52
India
Brazil 24
7
6
5
42
China 37
12
2
8
59
Russian Federation 22
11
6
5
44
South Africa 25
12
6
6
49
Russian Federation
Brazil 10
3
7
6
26
China 39
4
5
4
52
India 22
8
5
4
39
South Africa 11
4
2
5
22
South Africa
Brazil 27
7
6
3
43
China 40
6
5
9
60
India 31
7
9
4
51
Russian Federation 13
5
5
3
26
Source: Author own calculation based on UNCOMTRADE database using WITS accessed on 02/04/2020.

120 Kuldeep Kumar Lohani
In addition, in 2001, China’s IIT with BRICS countries at two-digit SITC chapters are
high in followings industries: IIT with Brazil in [5] Vegetables and fruit (0.99), [26] Textile
fibres (0.92), and [68] Non-ferrous metals (0.88); IIT with India in [9] Misc food
products (0.76), [27] Crude fertilizer/mineral (0.85), [29] Crude anim/veg mater n.e.s.
(0.94), [33] Petroleum and products (0.90), and [65] Textile yarn/fabric/art. (0.88); IIT
with Russian Federation in [26] Textile fibres (0.83), [52] Inorganic chemicals (0.83),
[61] Leather manufactures (0.77), [63] Cork/wood manufactures (0.82), [77] Electrical
equipment (0.87), [78] Road vehicles (0.89), and [89] Misc manufactures n.e.s. (0.99); and
IIT with South Africa in [3] Fish/shellfish/etc. (0.85), [11] Beverages (0.91), [33] Petroleum
and products (0.96), [53] Dyeing/tanning/color mat (0.95), [63] Cork/wood manufactures
(0.79), [71] Power generating equipment (0.98), and [74] Industrial equipment n.e.s.
(0.90).
Table 9.Overall BRICS Countries’ IIT with BRICS Countries at SITC- Two Digit Data Level in 2018
Country Name Partner Country Name
0-0.25
0.25-0.5
0.5-0.75
0.75-1
Total No. of Industry
Brazil
China 37
9
3
7
56
India 21
11
13
6
51
Russian Federation 23
7
6
3
39
South Africa 20
12
9
6
47
China
Brazil 38
11
3
5
57
India 32
13
6
7
58
Russian Federation 42
9
5
5
61
South Africa 42
10
2
3
57
India
Brazil 19
12
13
7
51
China 32
10
10
5
57
Russian Federation 27
10
8
6
51
South Africa 33
12
7
3
55
Russian Federation
Brazil 18
9
4
5
36
China 40
13
3
5
61
India 31
6
10
4
51
South Africa 22
8
2
4
36
South Africa
Brazil 24
12
7
8
51
China 41
7
6
5
59
India 30
9
11
5
55
Russian Federation 25
8
8
5
46
Source: Author own calculation based on UNCOMTRADE database using WITS accessed on 02/04/2020.
Further, in 2001, India’s IIT with BRICS countries at two-digit SITC chapters are high in
industries like: IIT with Brazil in [5] Vegetables and fruit (0.92), [67] Iron and steel
(0.76), [74] Industrial equipment n.e.s. (0.81), [75] Office/dat proc machines (0.82),
[82] Furniture/furnishings (0.81), and [85] Footwear (0.94); IIT with China in [4] Cereals/
cereal preparatn (0.77), [8] Animal feed ex unmlcer. (0.99), [9] Misc food products
(0.78), [27] Crude fertilizer/mineral (0.82), [29] Crude anim/veg mater n.e.s. (0.79), [55]
Perfume/cosmetic/cleansr (0.96), [59] Chem material/prods n.e.s. (0.98), [62] Rubber
manufactures n.e.s. (0.80), [65] Textile yarn/fabric/art. (0.95), [67] Iron and steel (0.77),
and [93] UN Special Code (0.85); IIT with Russian Federation is in [51] Organic
chemicals (0.98), [59] Chem material/prods n.e.s. (0.86), [66] Non-metal mineral manuf.
(0.80), [76] Telecommsetc equipment (0.84), [87] Scientific/etc instrument (0.92), [89]
Misc manufactures n.e.s. (0.81), and [93] UN Special Code (0.76); and IIT with South
Africa is in [57] Plastics in primary form (0.89), [63] Cork/wood manufactures (0.87),
[67] Iron and steel (0.99), [71] Power generating equipment (0.98), and [74] Industrial

Static and dynamic analysis of intra-industry trade of BRICS countries 121
equipment n.e.s. (0.92). Furthermore, in 2001, Russia Federation’s IIT with BRICS
countries at two-digit SITC chapters are high in followings industries: IIT with Brazil in
[64] Paper/paperboard/article (0.76), and [65] Textile yarn/fabric/art. (0.77); with China
in [0] Live animals except fish (0.88), [26] Textile fibres (0.86), [27] Crude fertilizer/
mineral (0.84), [52] Inorganic chemicals (0.95), [59] Chem material/prods n.e.s. (0.96),
[64] Paper/paperboard/article (0.87), [69] Metal manufactures n.e.s. (0.90), [72] Industry
special machine (0.94), [76] Telecomms etc. equipment (0.77), and [77] Electrical
equipment (0.80); IIT with India only in [62] Rubber manufactures n.e.s. (0.80); and with
South Africa only in [51] Organic chemicals (0.87). Lastly, in 2001, South Africa’s IIT
with BRICS countries at two-digit SITC chapters are high such as IIT with Brazil in [27]
Crude fertilizer/mineral (0.88), [51] Organic chemicals (0.87), [67] Iron and steel (0.98),
[69] Metal manufactures n.e.s. (0.83), [73] Metalworking machinery (0.88), [84]
Apparel/clothing/access (0.86), [87] Scientific/etc. instrument (0.90), and [88]
Photographic equ/clocks (0.85); with China in [11] Beverages (0.93), [27] Crude
fertilizer/mineral (0.86), [51] Organic chemicals (0.91), [53] Dyeing/tanning/color mat
(0.91), [64] Paper/paperboard/article (0.75), [71] Power generating equipment (0.99), [73]
Metalworking machinery (0.99), and [74] Industrial equipment n.e.s. (0.97); IIT with
India in [33] Petroleum and products (0.76), [51] Organic chemicals (0.91), [59] Chem
material/prods n.e.s. (0.94), [71] Power generating equipment (0.77), [74] Industrial
equipment n.e.s. (0.88), [76] Telecomms etc equipment (0.85), and [77] Electrical
equipment (0.90); and IIT with Russian Federation is in [75] Office/dat proc machines
(0.83), and [77] Electrical equipment (0.77).
Further, in 2010, Brazil’s IIT with BRICS countries at two-digit SITC chapters are high in
followings industries: IIT with China is in [6] Sugar/sugar prep/honey (0.81), [7] Coffee/
tea/cocoa/spices(0.78), and [66] Non-metal mineral manuf.(0.87); IIT with India in [23]
Crude/synthet/rec rubber (0.98), [68] Non-ferrous metals (0.99), [71] Power generating
equipment (0.90), [88] Photographic equ/clocks (0.90), and [89] Misc manufactures n.e.s.
(0.96); IIT with Russian Federation is in [25] Pulp and waste paper (0.97), [68] Non-ferrous
metals (0.75), [74] Industrial equipment n.e.s. (0.79), [75] Office/dat proc machines (0.79),
[78] Road vehicles (0.80), and [89] Misc manufactures n.e.s. (0.94); and IIT with South
Africa is in [53] Dyeing/tanning/color mat (0.88), [59] Chem material/prods n.e.s. (0.94),
and [62] Rubber manufactures n.e.s. (0.94). In addition, in 2010, China’s IIT with BRICS
countries at two-digit SITC chapters are high in industry like: IIT with Brazil is in [54]
Pharmaceutical products (0.85), [57] Plastics in primary form (0.98) and [61] Leather
manufactures (0.99); IIT with India is in [7] Coffee/tea/cocoa/spices (0.95), [22] Oil
seeds/oil fruits (0.92), [23] Crude/synthet/rec rubber (0.91), [41] Animal oil/fat (0.82), [51]
Organic chemicals (0.81), [54] Pharmaceutical products (0.96), [57] Plastics in primary
form (0.80), and [67] Iron and steel (0.94); IIT with Russian Federation is in [8] Animal
feed ex unmlcer. (0.78), [57] Plastics in primary form (0.88), [67] Iron and steel (0.98), and
[72] Industry special machine (1.00); and IIT with South Africa is in [3] Fish/shellfish/etc.
(0.91), [11] Beverages (0.92), [27] Crude fertilizer/mineral (0.92), [51] Organic chemicals
(0.96), [52] Inorganic chemicals (0.99), [57] Plastics in primary form (0.89), [68] Non-
ferrous metals (0.98), [78] Road vehicles (0.94), and [93] UN Special Cod (1.00). Further,
in 2010, India’s IIT with BRICS countries at two-digit SITC chapters are high in industries

122 Kuldeep Kumar Lohani
like: IIT with Brazil in [7] Coffee/tea/cocoa/spices (0.89), [57] Plastics in primary form
(0.82), [61] Leather manufactures (0.76), and [71] Power generating equipment (0.85); IIT
with China in [3] Fish/shellfish/etc. (0.84), [6] Sugar/sugar prep/honey (0.96), [28] Metal
ores/metal scrap (0.81), [32] Coal/coke/briquettes (0.78), [59] Chem. material/prods n.e.s.
(0.76), [61] Leather manufactures (0.84), and [88] Photographic equ/clocks (0.82); IIT with
Russian Federation is in [26] Textile fibres (0.97), [28] Metal ores/metal scrap (0.80), [57]
Plastics in primary form (0.99), and [77] Electrical equipment (0.79) and IIT with South
Africa is in [29] Crude anim/veg mater n.e.s. (0.96), [66] Non-metal mineral manuf. (0.88),
[68] Non-ferrous metals (0.90), and [87] Scientific/etc instrument (0.97). Furthermore, in
2010, Russia’s IIT with BRICS countries at two-digit SITC chapters are high in followings
industries: IIT with Brazil in [58] Plastics non-primry form (0.98), and [65] Textile yarn/
fabric/art. (0.91); IIT with China in [33] Petroleum and products (0.94), and [51] Organic
chemicals (0.79); IIT with India in [9] Misc food products (0.95), [23] Crude/synthet/rec
rubber (0.97), [64] Paper/paperboard/article (0.76), [71] Power generating equipment
(0.92), and [75] Office/dat proc machines (0.90); and IIT with South Africa is in [76]
Telecomms etc equipment (0.90), [78] Road vehicles (0.98), and [87] Scientific/etc
instrument (0.95). Finally, in 2010, South Africa’s IIT with BRICS countries at two-digit
SITC chapters are high industries such as: IIt with Brazil in [51] Organic chemicals (0.95),
[52] Inorganic chemicals (0.98), and [65] Textile yarn/fabric/art. (0.85); IIT with China in
[9] Misc food products (0.91), [42] Fixed veg oils/fats (0.81), [65] Textile yarn/fabric/art.
(0.99), [73] Metalworking machinery (0.84), and [88] Photographic equ/clocks (0.85); IIT
with India in [9] Misc food products (0.89), [26] Textile fibres (0.95), [52] Inorganic
chemicals (0.86), [55] Perfume/cosmetic/cleansr (0.95), [71] Power generating equipment
(0.86), and [75] Office/dat proc machines (0.93); IIT with Russian Federation in [52]
Inorganic chemicals (0.89), [64] Paper/paperboard/article (0.94), [65] Textile yarn/fabric/
art. (0.94), [78] Road vehicles (0.84), and [89] Misc manufactures n.e.s. (0.87).
Furthermore, in 2018, Brazil’s IIT with BRICS countries at two-digit SITC chapters are
high in followings industries: IIT with China in [8] Animal feed ex unmlcer. (0.89), [23]
Crude/synthet/rec rubber (0.81), [55] Perfume/cosmetic/cleansr (0.99), [57] Plastics in
primary form (0.91), [63] Cork/wood manufactures (0.86), [67] Iron and steel (0.87), and
[68] Non-ferrous metals (0.77); IIT with India is in [26] Textile fibres (0.83), [55]
Perfume/cosmetic/cleansr (0.97), [67] Iron and steel (0.98), [72] Industry special machine
(0.97), [73] Metalworking machinery (0.75), and [76] Telecomms etc equipment (0.82);
IIT with Russian Federation is in [4] Cereals/cereal preparatn (0.81),[51] Organic
chemicals (0.96), and [75] Office/dat proc machines (0.80); and IIT with South Africa is
in [26] Textile fibres (0.78), [28] Metal ores/metal scrap (0.78), [53] Dyeing/
tanning/color mat (0.91), [65] Textile yarn/fabric/art. (0.92), [67] Iron and steel (0.96),
and [84] Apparel/clothing/access (0.86). In addition, in 2018, China’s IIT with BRICS
countries at two-digit SITC chapters are high in industries like: IIT with Brazil in [5]
Vegetables and fruit (0.93), [26] Textile fibres (0.79), [57] Plastics in primary form
(0.79), [67] Iron and steel (0.85), and [68] Non-ferrous metals (0.93); IIT with India is in
[5] Vegetables and fruit (0.79), [8] Animal feed ex unmlcer. (0.78), [23] Crude/
synthet/rec rubber (0.87), [29] Crude anim/veg mater n.e.s. (0.97), [33] Petroleum and
products (0.95), [41] Animal oil/fa (0.87), and [66] Non-metal mineral manuf. (0.79); IIT

Static and dynamic analysis of intra-industry trade of BRICS countries 123
with Russian Federation takes place in [11] Beverages (0.78), [12] Tobacco/manufactures
(0.79), [52] Inorganic chemicals (0.79), [61] Leather manufactures (0.80), [63]
Cork/wood manufactures (0.84); and IIT with South Africa is in [6] Sugar/sugar
prep/honey (0.96),[27] Crude fertilizer/mineral (0.88), and [54] Pharmaceutical products
(0.88). On the other hand, in 2018, India’s IIT with BRICS countries at two-digit SITC
chapters are high in followings: IIT with Brazil is in [12] Tobacco/manufactures (0.96),
[26] Textile fibres (0.87), [52] Inorganic chemicals (0.80), [66] Non-metal mineral
manuf. (0.80), [67] Iron and steel (0.78), [73] Metalworking machinery (0.87), and [85]
Footwear (0.98); IIt with China takes place in [6] Sugar/sugar prep/honey (0.88), [12]
Tobacco/manufactures (0.96), [22] Oil seeds/oil fruits (0.85), [29] Crude anim/veg mater
n.e.s. (0.79), and [57] Plastics in primary form (0.97); IIT with Russian Federation largely
happens in [51] Organic chemicals (0.86), [61] Leather manufactures (0.91), [72]
Industry special machine (0.77), [75] Office/dat proc machines (0.86), [79]
Railway/tramway equipment (0.86), and [87] Scientific/etc instrument (0.89); and IIT
with South Africa is in [11] Beverages (0.84), [23] Crude/synthet/rec rubber (0.84), and
[57] Plastics in primary form (0.79). Additionally, in 2018, Russian Federation’s IIT with
BRICS countries at two-digit SITC chapters are high in industries such as: IIT with Brazil
is in [25] Pulp and waste paper (0.75), [57] Plastics in primary form (0.77), [62] Rubber
manufactures n.e.s. (0.87), [63] Cork/wood manufactures (0.77), and [82] Furniture/
furnishings (0.98); IIT with China in [7] Coffee/tea/cocoa/spices (0.97), [8] Animal feed
ex unmlcer. (0.98), [64] Paper/paperboard/article (0.86), [71] Power generating
equipment (0.86), and [79] Railway/tramway equipment (0.96); IIT with India in [61]
Leather manufactures (0.82), [69] Metal manufactures n.e.s. (0.90), [72] Industry special
machine (0.87), and [77] Electrical equipment (0.83); and IIT with South Africa takes
place in [59] Chem material/prods n.e.s. (0.99), [84] Apparel/clothing/access (0.92), [88]
Photographic equ/clocks (0.99), and [89] Misc manufactures n.e.s. (0.82). Lastly, in 2018,
South Africa’s IIT with BRICS countries at two-digit SITC chapters are high in
followings industries: IIT with Brazil is in [3] Fish/shellfish/etc. (0.78), [5] Vegetables
and fruit (0.91), [27] Crude fertilizer/mineral (0.91), [28] Metal ores/metal scrap (0.75),
[51] Organic chemicals (0.99), [68] Non-ferrous metals (1.00), [69] Metal manufactures
n.e.s. (0.81), and [89] Misc manufactures n.e.s. (0.86); IIT with China takes place in [6]
Sugar/sugar prep/honey (0.82), [8] Animal feed ex unmlcer. (0.75), [12]
Tobacco/manufactures (0.90), [27] Crude fertilizer/mineral (0.82), and [42] Fixed veg
oils/fats (0.79); with India in [5] Vegetables and fruit (0.77), [26] Textile fibres (0.90),
[66] Non-metal mineral manuf. (0.88), [75] Office/dat proc machines (0.97), and [79]
Railway/tramway equipment (0.96); and IIT with Russian Federation is in [0] Live
animals except fish (0.90), [55] Perfume/cosmetic/cleansr (0.87), [59] Chem material/
prods n.e.s. (0.95), [71] Power generating equipment (0.81), and [79] Railway/tramway
equipment (0.96).
Dynamic IIT analysis
The analysis has been carried out at four digit-SITC data for the three sub period such as
2000-2005, 2009-2014 and 2015-2018. The followings process has been adopted to carry
out analysis of MIIT: Firstly, data of four digits SITC has been deflated to get the real
change during the selected period by consumer price index of United States of America

124 Kuldeep Kumar Lohani
collected from World Development Indicator, World Bank database and its base year is
2010. This method used because of non-availability of export/import unit price index for
all BRICS countries. Secondly, regular trade flow of selected sub-period has been
considered in the analysis, e.g. Ferto (2008). Thirdly, sub-sectors are defined in this
analysis at four digits and aggregated to calculate industry at two-digit SITC level.
Fourthly, both indices have been added over all sectors by trade weight. Finally, the
results have been reported in Tables 10-12.
The analysis sample size has been selected as per above said criteria such as in 2000-2005,
554 sub-industries and 55 industries were selected, 707 sub-industries and 60 industries
were chosen during 2009-2014 and in 2015-2018, 760 sub-industries and 60 industries
were selected for the analysis of MIIT of BRICS countries. Further, in 2000-2005, Brazil
trade with BRICS countries is more or less IT except with India; it was VIIT nearly 50%.
China trade with BRICS countries is almost IT. India trade with BRICS countries is
dominated by IT except with Russia, it was HIIT. Russia trade with BRICS countries is
approximately IT. South Africa trade with BRICS countries is largely IT. In addition,
South Africa trade with Brazil show 30% VIIT. Nonetheless, South Africa has not been
observed an active trade partner with the BRICS countries during 2000-2005 (see Table 10).
Table 10. Decomposition Trade Flow of BRICS Countries during 2000-2005
Country Name Partner Country Name
AJ
IIT
AW
HIIT
AJ-AW
V
IIT 1-AJ
IT
Brazil
China 0.22
0.13
0.09 0.78
India 0.67
0.17
0.50 0.33
Russian Federation
0.14
0.14
0.00 0.86
China
Brazil 0.30
0.17
0.13 0.70
India 0.32
0.18
0.13 0.68
Russian Federation
0.17
0.09
0.08 0.83
India
Brazil 0.28
0.10
0.18 0.72
China 0.25
0.14
0.11 0.75
Russian Federation
0.60
0.60
0.00 0.40
Russian Federation
Brazil 0.00
0.00
0.00 1.00
China 0.25
0.12
0.13 0.75
India 0.31
0.09
0.22 0.69
South Africa
Brazil 0.46
0.16
0.30 0.54
China 0.10
0.09
0.02 0.90
India 0.29
0.15
0.14 0.71
Source: Author own calculation based on UNCOMTRADE database using WITS accessed on 02/04/2020.
Additionally, in 2009-2014, Brazil trade with BRICS countries is more or less IT except
with India; it was both HIIT and VIIT nearly 16% and 15% respectively. China trade with
BRICS countries almost concentrated to Brazil and India, where, trade with Brazil is
almost IT. On the other hand, trade with India is vertically integrated within the same
Industry. Further, India trade with BRICS countries is dominated by IT except with Brazil
and China, where, it was both HIIT (nearly 26% and 17%) and VIIT (around 21% and
22%), respectively. Russia trade with BRICS countries is approximately IT. Nonetheless,
Russia trade with Brazil is HIIT nearly 20% and trade with India is close to 38%
vertically integrated in the same industry. And South Africa trade with BRICS countries
is largely IT. In addition, South Africa trade with Brazil reveals both nearly 22% HIIT

Static and dynamic analysis of intra-industry trade of BRICS countries 125
and 21% VIIT has been observed. Nonetheless, South Africa trade with India and China
accounts for 18% and 15% of VIIT respectively, during 2009-2014 (see Table 11).
Table 11.Decomposition Trade Flow of BRICS Countries during 2009-2014
Country Name Partner Country Name
AJ
IIT
AW
HIIT
AJ-AW
V
IIT
1-AJ
IT
Brazil
China 0.11
0.04
0.07
0.89
India 0.31
0.16
0.15
0.69
Russian Federation 0.10
0.10
0.00
0.90
South Africa 0.06
0.06
0.00
0.94
China
Brazil 0.15
0.05
0.10
0.85
India 0.39
0.09
0.29
0.61
India
Brazil 0.35
0.13
0.22
0.65
China 0.37
0.12
0.25
0.63
Russian Federation 0.01
0.01
0.00
0.99
South Africa 0.00
0.00
0.00
1.00
Russian Federation
Brazil 0.29
0.20
0.09
0.71
China 0.09
0.03
0.06
0.91
India 0.47
0.09
0.38
0.53
South Africa 0.09
0.09
0.00
0.91
South Africa
Brazil 0.43
0.22
0.21
0.57
China 0.18
0.04
0.15
0.82
India 0.26
0.08
0.18
0.74
Source: Author own calculation based on UNCOMTRADE database using WITS accessed on 02/04/2020.
Additionally, in 2015-2018, Brazil trade with BRICS countries is more or less IT except
with India and China; where trade with India is HIIT (13%) as well as VIIT (33%) and
trade with China is VIIT nearly 46%. Further, China trade with BRICS countries takes
place mostly with Brazil and India, such as trade with Brazil is VIIT nearly 50% and
trade with India is HIIT (14%) and VIIT (31%) as well. India trade with BRICS countries
is dominated by IT. Nevertheless, IIT trade also observed between India and BRICS
countries, where HIIT accounts the highest such as Brazil (26%), China (17%), Russia
(2%) and South Africa (16%). In addition, VIIT also observed Brazil and China 21% and
22%, respectively.
On the other side, Russia trade with BRICS countries is approximately IT except India,
where its percentage share in trade flow is 51%. Nevertheless, Russia’s trade with BRICS
countries also observed VIIT such as trade with Brazil, China and India accounts for
15%, 27%, 41% respectively. And South Africa trade with BRICS countries is mostly IT.
However, South Africa’s trade with BRICS countries also reveals IIT, where, South
Africa’s VIIT with Brazil, China and India accounts for 24%, 27% and 11% respectively.
In addition, HIIT only takes place between South Africa and Brazil stands for 10% only,
during 2015-18 (see Table 12).
Table 12. Decomposition Trade Flow of BRICS Countries during 2015-2018
Country Name Partner Country Name AJ
IIT
AW
HIIT
AJ-AW
V
IIT
1-AJ
IT
Brazil
China 0.52
0.05
0.46
0.48
India 0.46
0.13
0.33
0.54
Russian Federation 0.00
0.00
0.00
1.00
South Africa 0.00
0.00
0.00
1.00
China
Brazil 0.54
0.04
0.50
0.46
India 0.46
0.14
0.31
0.54

126 Kuldeep Kumar Lohani
Country Name Partner Country Name AJ
IIT
AW
HIIT
AJ-AW
V
IIT
1-AJ
IT
India
Brazil 0.46
0.26
0.21
0.54
China 0.39
0.17
0.22
0.61
Russian Federation 0.02
0.02
0.00
0.98
South Africa 0.16
0.16
0.00
0.84
Russian Federation
Brazil 0.17
0.03
0.15
0.83
China 0.33
0.05
0.27
0.67
India 0.49
0.08
0.41
0.51
South Africa 0.00
0.00
0.00
1.00
South Africa
Brazil 0.34
0.10
0.24
0.66
China 0.29
0.02
0.27
0.71
India 0.14
0.03
0.11
0.86
Russian Federation 0.00
0.00
0.00
1.00
Source: Author own calculation based on UNCOMTRADE database using WITS accessed on 02/04/2020.
Discussion
The GLI indices values is in line with Grubel and Lloyd (1971), Leitão (2011).
Further, the MIIT indices values are also in line with Brulhart (1994) and Thomand
and McDowell (1999).
In addition, the value of both the static and dynamic indices should not be greater than
one have been observed from the analysis, which is in line with literature of IIT. For
example, Proença and Faustino (2015), Filipowicz (2016), Şahbudak and Şahin (2016),
Maxir and Masullo (2017), Mutambara (2017), Dwesar and Kesharwani (2019) and
Varshini and Manonmani (2019). Hence, the results are very robust and reliable.
Conclusion and policy implications
In this article, we tried to investigate Intra-Industry Trade among the BRICS countries.
IIT measured by using Grubel and Lloyd IIT Index for static analysis and Thom and
McDowell (1999) MIIT index for dynamic analysis. In addition, the decomposition of IIT
carried out to distinguish between Horizontal and Vertical IIT at Industry level (two
digits- SITC level data). The unit of analysis selected at one- digit and two-digit SITC
Industry level for GL IIT index. Further, to conduct MIIT analysis, industry is defined at
two-digit-SITC level data by aggregating four-digit SITC sub-industry level data of IIT of
BRICS countries. Further, study analysed the Pre and Post-BRICS trade pattern of IIT.
Thereafter, this study emphasises that do emerging economies IIT among themselves? On
the basis of estimated results of this study revealed that IIT occurs at higher level of
aggregation. This signifies that developing countries are trading in the same Industry for
love for variety and cost effectiveness. In addition, evidence on MIITI shows that BRICS
countries’ IIT increased over the period. Besides, BRICS countries get benefited from IIT
over the years and since BRICS inception as well, which is validated by MIITI values.
Hence, the empirical result contradicts conventional Krugman (1979, 1985) hypothesis of
IIT takes place in developed nations (industrialist nations).

Static and dynamic analysis of intra-industry trade of BRICS countries 127
With respect to the policy implications, BRICS countries should focus on opportunities of
trade complementary of intermediates products. This will enhance cost effectiveness of
product development or production. Further, this will promote innovation in the BRICS
region. To achieve this, countries needs to conduct constructive trade dialog among the
BRICS countries.
Acknowledgements
This article is based on a chapter of author’s PhD thesis. Author would like to offer
sincere thanks to Biswajit Mandal, Associate Professor, and Prof. Sarbajit Sengupta,
Professor of Economics, Department of Economics & Politics, Visva-Bharati (A Central
University), Santiniketan, West-Bengal, India. Financial support from Indian Council of
Social Science (ICSSR), New Delhi, in form of Doctoral Fellowship is greatly
acknowledged. The usual disclaimer applies.
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130 Kuldeep Kumar Lohani
Appendix
SITC (Standard International Trade Classifications)-one digit. It includes ten sectors such as total
all products, [0] Food and live animals, [1] Beverages and tobacco, [2] Crude materials, inedible,
except fuels, [3] Mineral fuels, lubricants and related materials, [4] Animal and vegetable oils, fats
and waxes, [5] Chemicals and related products, n.e.s., [6] Manufactured goods, [7] Machinery and
transport equipment, [8] Miscellaneous manufactured articles, [9] Commodities and transactions,
n.e.s.