Gravity Model of Trade (IndiaGermany)

1.

Development of Indo-German Trade (in

Million DM )
(*in million Euro)
Indian
Indian
Trade
Year
exports
imports
Volume
1960
185
834
1,019
1965
244
1,049
1,293
1970
261
571
832
1975
483
863
1,346
1980
1,135
1,372
2,507
1985
1,472
3,377
4,849
1990
2,510
2,732
5,242
1995
3,602
4,574
8,176
2000*
2,464
2,064
4,548
2005*
3,396
4,202
7,598
2010*
6,193
9,254
15,447
2011*
7,505
10,871
18,376

Real GDP (in Billion

USD)

Population
Year

Indian
1960

449595500

1961

458626700

1962

467962100

1963

477616000

1964

487607400

1965

497952300

1966

508656300

1967

519722200

1968

531161000

1969

542983900

German

Year

Indian

72814900

1969

196.71

73377632

1970

206.85

74025784

1971

210.25

74714353

1972

209.09

75318337

1973

215.98

75963695

1974

218.54

76600311

1975

238.53

76951336

1976

242.50

77294314

1977

260.09

77909682

1978

274.95

2010

Germ
an
1387.8
5
1481.6
1
1528.0
3
1593.7
4
1669.8
8
1684.7
4
1670.1
4
1752.8
0
1811.4
7
1865.9
6

1970

555199700

1971

567805100

1972

580798800

1973

594193000

1974

608002600

1975

622232400

1976

636883700

1977

651935200

1978

667339000

1979

683032500

1980

698965600

1981

715105200

1982

731443800

1983

747986300

1984

764749400

1985

781736500

1986

798941800

1987

816328800

1988

833833500

1989

851374700

1990

868890700

1991

886348700

1992

903749600

1993

921107500

1994

938452500

78169289

1979

260.55

78312842

1980

278.10

78688452

1981

294.80

78936666

1982

305.05

78967433

1983

327.28

78673554

1984

339.79

78336950

1985

357.64

78159814

1986

374.72

78091820

1987

389.58

78126350

1988

427.09

78288576

1989

452.49

78407907

1990

477.53

78333366

1991

482.58

78128282

1992

509.03

77858685

1993

533.22

77684873

1994

568.72

77720436

1995

611.80

77839920

1996

657.99

78144619

1997

684.64

78751283

1998

726.98

79433029

1999

791.29

80013896

2000

821.68

80624598

2001

861.32

81156363
81438348

2002
2003

894.08
964.36

1943.4
1
1970.7
9
1981.2
2
1973.4
0
2004.4
3
2061.0
1
2108.9
9
2157.2
3
2187.4
8
2268.5
7
2356.9
7
2480.8
2
2607.5
5
2657.4
1
2630.7
8
2695.8
0
2741.0
1
2762.6
9
2810.6
8
2863.0
1
2916.5
8
3005.7
6
3051.2
8
3051.5
9
3040.1

1995

955804400

1996

973147600

1997

990460200

1998

81678051

2004

81914831

2005

82034771

2006

100774700
0

82047195

2007

1999

102501500
0

82100243

2008

2000

104226200
0

82211508

2009

2001

105950100
0

82349925

2010

2002

107670600
0

82488495

2011

2003

109378700
0

82534176

2012

2004

111062600
0

82516260

2013

2005

112714400
0

82469422

2014

2006
2007
2008
2009
2010
2011
2012
2013

114328900
0
115909500
0
117466200
0
119013800
0
120562500
0
122115600
0
123668700
0
125214000
0

1040.7
7
1137.4
0
1242.7
7
1364.5
7
1417.6
7
1537.8
8
1695.6
7
1808.2
4
1893.8
8
1988.8
9
2096.8
1

3
3075.4
3
3096.4
9
3211.0
6
3316.0
3
3351.9
5
3179.4
7
3307.0
5
3417.2
8
3440.8
2
3455.6
8
3510.9
7

82376451
82266372
82110097
81902307

Distance
From
Mumb
ai

To
Hambu
rg
Berlin

5785

80425823

Delhi
Mumb
ai

Munich

6336

80651873

Delhi

Munich

7802

81776930
81797673

KM
6542

Calculations
Trade ig = G * Sizei * Sizeg /
Distanceig
Here Size of India or Germany can refer to their GDP (economic size) or
Population (producer/Market size) and distance can be Port to port, Capital to
Capital etc.

Ie. G= (Trade ig * Distance ig) /

(Sizei * Sizeg)

Case 1

Size refers to GDP

Here, due to data availability issues, G has been calculated for every 5 years from 19702010 and 2011

Year
1960
1965

Trade
Volume
1019
1293

Indian
GDP
n/a
n/a

German
GDP
n/a
n/a

1970

832

206.85

1481.61

1975

1346

238.53

1670.14

1980

2507

278.10

1970.79

1985

4849

357.64

2108.99

1990

5242

477.53

2480.82

1995

8176

611.80

2741.01

2000*

4548

821.68

3005.76

2005*

7598

1137.40

3096.49

2010*

15447

1695.67

3307.05

2011*
2012
2013
2014

18376
n/a
n/a
n/a

1808.24
1893.88
1988.89
2096.81

3417.28
3440.82
3455.68
3510.97

(MuH)

n/a
n/a
17.75
99
22.10
31
29.92
44
42.05
72
28.94
74
31.89
55
12.04
69
14.11
33
18.02
07
19.45
48
n/a
n/a
n/a

G D-B
n/a
n/a
15.70
48
19.54
55
26.46
17
37.19
06
25.59
78
28.20
48
10.65
29
12.48
02
15.93
55
17.20
36
n/a
n/a
n/a

MuMe

n/a
n/a
17.200
65
21.407
12
28.982
1
40.732
87
28.035
89
30.891
15
11.667
53
13.668
87
17.453
3
18.842
14
n/a
n/a
n/a

D-Me

n/a
n/a
21.18047
27
26.36021
7
35.68787
02
50.15748
47
34.52273
26
38.03863
21
14.36712
47
16.83152
68
21.49157
57
23.20176
97
n/a
n/a
n/a

60
50
40
G (Mu-H)

30

G D-B
G Mu-Me

20

G D-Me

10
0

Case 2

Size refers to Population

Here, due to data availability issues, G has been calculated for every 5 years from 19702010 and 2011
Also, as population values are huge, G has been multipliued by
100 crore

Trade Volume

Indian
Populatio
n

1960

1019

44959550
0

1965

1293

49795230
0

1970

832

55519970
0

1975

1346

62223240
0

2507

69896560
0

4849

78173650
0

5242

86889070
0

1995

8176

95580440
0

2000*

4548

10422620
00

Year

1980
1985
1990

German
Populat
ion
7281490
0
7596369
5
7816928
9
7867355
4
7828857
6
7768487
3
7943302
9
8167805
1
8221150
8

G
(Mu-H)

0.20
4
0.22
4
0.12
5
0.18
0
0.30
0
0.52
2
0.49
7
0.68
5
0.34
7

G D-B
0.18
0
0.19
8
0.11
1
0.15
9
0.26
5
0.46
2
0.43
9
0.60
6
0.30
7

MuMe

D-Me

0.197

0.243

0.217

0.267

0.121

0.150

0.174

0.215

0.290

0.357

0.506

0.623

0.481

0.593

0.664

0.817

0.336

0.414

2005*

7598

11271440
00

2010*

15447

12056250
00

18376

12211560
00

2011*

8246942
2
8177693
0
8179767
3

0.53
5
1.02
5
1.20
4

0.47
3
0.90
6
1.06
4

0.518

0.638

0.993

1.222

1.166

1.435

1.600
1.400
1.200
1.000
0.800

G (Mu-H)
G D-B

0.600

G Mu-Me

0.400

G D-Me

0.200
0.000

2.
World Bank Openness Data (2014)
Merchandis
Countr Import/G
Export/
e Trade/
y
DP
GDP
GDP
Germa
ny
39.20%
45.60%
70.80%
India
26%
23.60%
37.60%
Germany is a developed export oriented state which aims to reduce all barriers of
trade and engage in transparent trade. Also, as export is more than import, german
policy makers need mot worry about forex reserves.
India on the other hand needs to have a firm barrier policy to help promote
domestic industries, this reduces imports and promotes exports and thus in the long
run will have a positive impact on our economy.