An Analysis of Intra-Industry Trade between Japan, Malaysia and China

M. Affendy Arip (), Lau Sim Yee () and Madono Satoru ()
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M. Affendy Arip: Faculty of Economics and Business, Universiti Malaysia Sarawak
Lau Sim Yee: Faculty of Economics, Graduate School of International Economics and Business Administration, Reitaku Univeristy, Japan
Madono Satoru: Faculty of Economics, Graduate School of International Economics and Business Administration, Reitaku Univeristy, Japan

Institutions and Economies (formerly known as International Journal of Institutions and Economies), 2011, vol. 3, issue 1, 1-30

Abstract: This paper investigates the bilateral trade pattern between Japan, Malaysia and China (JMC) using the intra-industry trade (IIT) index analysis. Our empirical findings revealed the following. First, China shows a higher degree of IIT relation with Japan vis-à-vis Malaysia. Second, to the extent of whether rapid manufacturing development in China is affecting Malaysia’s export to Japan, our analytical evidence demonstrates that the degree of overlapping exports to Japan by Malaysia and China has increased over time. Although this trend appears to be an indication of increasing competition from China in relation to Malaysia’s products in the Japanese market, our empirical evidence – detailing the degree of product similarity between Malaysia and China using the unit value (UV) measurement – shows that both countries’ exports actually comprise mainly vertically differentiated products or different segments of the market in Japan. Nevertheless, the results also reveal that, compared to Malaysia, China is rapidly increasing its export share in horizontally differentiated products or similar market segments.

Keywords: - Japan; Malaysia; China; intra-industry trade; SITC Rev.2; ISIC Rev.3 (search for similar items in EconPapers)
JEL-codes: F14 F43 L11 L70 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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