Study of the Measurement and Determinants of Intra-industry Trade in East Asia *

Michael Thorpe and Zhaoyang Zhang

Asian Economic Journal, 2005, vol. 19, issue 2, pages 231-247

Abstract: The present paper investigates the development of intra-industry trade (IIT) among the East Asian economies over the 1970-1996 period. A dynamic index is used to capture the changes in the structure of trade flows. Based on this approach, IIT is decomposed into horizontal (HIIT) and vertical components (VIIT) and the determinants of each are investigated. The results show that both HIIT and VIIT have exhibited increased importance over the sample period in manufacturing. Using pooled panel data the two-way trade in all measures of IIT is found to be positively related to the country-specific variables, such as the market size, exhange rate depreciation, the levels of development and income, and negatively to the geographic proximity of the partners. Economies of scale are seen to have a positive influence on IIT and HIIT, but a negative relationship with VIIT. Although the relative openness of a country's trade regime shows no significant relationship with any form of IIT, a trade imbalance does affect IIT and HIIT flows. The findings have implications for assessing the structural adjustment costs associated with the trade liberalization process as HIIT is associated with demand for variety and relates to two-way trade in goods of similar quality, while VIIT is driven by international specialization and differences in relative factor endowments. Copyright 2005 East Asian Economic Association..

Downloads: (external link)
http://www.blackwell ... &year=2005&part=null link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1351-3958

Access Statistics for this article

Asian Economic Journal is edited by Sung Yun-Wing and Shigeyuki Abe

More articles in Asian Economic Journal from East Asian Economic Association
Series data maintained by Christopher F. Baum ().