Intra‐industry Trade, Reconsidered: The Role of Technology Transfer and Foreign Direct Investment

Toshihiro Okubo

The World Economy, 2007, vol. 30, issue 12, 1855-1876

Abstract: This paper investigates novel determinants of intra‐industry trade (IIT) of late 1990s Japanese trade. Our empirical analysis shows that IIT is increased not only by the similarity of GDP and factor endowment but also by technology transfer via Japanese FDI. In particular, the current high proportion of Japanese IIT with Asian countries can be explained by technology transfer (licensing between headquarters and overseas affiliates) via FDI.

Date: 2007
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