Gravity Model and Its Relevance in Trade between India and Saudi Arabia

Abstract

 The trade relationship between India and Saudi Arabia has started in the pre-oil era. India’s trade ties with Saudi Arabia and other Gulf Co-operation Council (GCC) over decades have expanded and evolved to the point of interdependence. India and the GCC each have structural profitable advantages whose operation in their relationship is creating solidarity benefits to both mates. In the case of crude oil import by India, Saudi Arabia is the topmost exporter among all other GULF countries. The comparative advantages of the domestic products in the international market are different for different products therefore to see the relative advantages I have analyzed the revealed comparative advantages.  Either, a great number of Indian professed workforces are furnishing services in the country. All these different factors lead to a higher volume of trade every time and this paper is explained by assaying analyzing the Gravity model of trade. It shows both qualitative and quantitative advantages of trade with Saudi Arabia as well as the relative significance of trade in the world trade scenario. Therefore, the connection of this trade relation is analyzed with the help of the gravity model in this paper.