Abstract
The chapter focuses on the revealed comparative advantage (RCA) that India and China may have (or not) with the Arctic region vis-à-vis certain marine and mineral resources. The outcomes will indicate where and how India and China could look to maximize trading potential, other than natural gases. The study applies a multi-country and multi-commodity Ricardian trade model and utilizes the Balassa Index to examine the revealed comparative advantage of select fish and minerals available at the Arctic. The study finds that there is considerable comparative advantage that the Arctic enjoys in terms of export of salmon/trout/cod and palladium vis-à-vis India and China. India and China both have a lot to gain by positively contributing towards intensification of partnerships among the governments for sustainable management of the resources. The focus should be on effective cooperation among the states in addressing illegal, unreported, and unregulated (IUU) fishing and to promote human development by supporting and safeguarding the small-scale actors in both mining and fishing sectors.
TopBackground
The Arctic region is known for mining, fisheries, hydrocarbon, hydropower, and natural gases. These vast natural resources are largely untapped due to the harsh environment conditions and call for special logistics that are conducive to the climate. As far as minerals and mining are concerned, the Arctic region has vast amounts of minerals such as phosphate, bauxite, iron ore, copper, and nickel. These minerals have widespread use in various important industries. Russia alone, mines an average of 11 million tons of phosphates. This is approximately equivalent to 8% of the global output. Phosphates are used in the manufacturing of agricultural fertilizers. Water treatment, flame-retardant materials, and corrosion protection also incorporate phosphates and its derivatives. In 2010, Russia also mined and processed bauxite into 3.85 million tons of aluminium, which was 9.3% of the world production. This made Russia the second-largest producer of bauxite in the world after China. Russia also mined 100 million tons of iron ore, 6.25% of the global production (Buixade Farre et al., 2014).
Key Terms in this Chapter
Geo-Politics: An explanation of the political behavior of states based on geographic variables.
Sustainability: An act of being maintained or continued at a particular level or rate.
Harmonic System: A system of classification and coding of commodities where the countries are allowed to classify the commodities that they export and import along common guidelines. Each commodity is coded and disaggregated at various levels. The system comprises approximately 5,300 product descriptions that appear as headings and subheadings, arranged in 99 chapters, grouped in 21 sections.
Blue Economic Passage: An ocean-based passage that proposes to link Africa, Oceania, and Europe with Asia which was a part of the Vision for Maritime Cooperation Under the Belt and Road Initiative in order to promote maritime activities and cooperation.
Arctic Council: A cooperative forum among the Arctic states that intends to facilitate cooperation, coordination, and interaction among the states along with participation from the dwellers of the Arctic region. The participant economies are Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, and the USA.
Cooperation: An act of coming together to achieve a common goal through assistance and formation of cooperatives.
Revealed Comparative Advantage: An index to indicate the advantage or disadvantage of a particular country in particular commodities or groups of commodities constructed with the help of trade flows.