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Intra-industry Trade and Production Networks

Toshihiro Okubo ()

No 13-2004, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: This paper examines alternative determinants of intra-industry trade (IIT). Technology transfer via vertical FDI can be an alternative determinant to distance and country-specific factors in gravity equations. Vertical FDI is likely to be made in neighbouring countries in the presence of large gaps in wages and technology. These large gaps lead to foreign direct investment (FDI) and promote technology transfer from headquarters to overseas affiliates. The technology transfer through vertical FDI promotes activities in the overseas affiliates and thus increases re-imports, which can increase IIT.

Keywords: FDI; Technology Transfer; Wage Gap; Comparative Advantage; Firm Heterogeneity. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int, nep-net and nep-sea
Date: 2004-12
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