Intra-industry trade in manufactures: The case of Korea

Abstract

Intra-Industry Trade in Manufactures: The Case of Korea. - This paper provides an empirical analysis of intra-industry trade (IIT) in Korea's foreign trade. First, we measure the share of IIT in Korea's trade of manufactures from 1977 to 1986. The share of IIT increased from 0.350 in 1977 to 0.502 in 1985, but declined to 0.421 in 1986. Second, we test hypotheses regarding country characteristics of IIT. Using the unadjusted Grubel-Lloyd index with a trade imbalance variable in the regression equations, we show that the extent of IIT is: (1) negatively correlated with differences in per capita incomes and with “economic distances” between Korea and its trading partners, and (2) positively correlated with the trade intensity between Korea and its trading partners and with the existence of a common cultural background.