Impact of imitation ability on ASEAN countries' intra-industry trade: a system GMM approach

Abstract

This study analyzes the impacts of imitation ability on major ASEAN countries' horizontal and vertical intra-industry trade for the period 2006–2016. The unique features of this study are twofold. Firstly, we develop a new composite index of imitation ability based on broad coverage of various components. Secondly, we consider the differential impacts of imitation ability on ASEAN countries' intra-industry trade with partner countries grouped by their levels of economic development. We found that ASEAN countries’ imitation ability positively impacts the extent of their horizontal and vertical intra-industry trade globally. However, the impact of imitation ability on ASEAN countries' HIIT is the highest in their trade with middle-income countries. In contrast, the effect of imitation ability on ASEAN countries' VIIT is the strongest in their trade with high-income countries.