Intra-Industry Trade Patterns between Japan and East Asian Countries in the Agri-Food Sector

Abstract

This paper attempts to investigate the different patterns of IIT in the agrifood sector between Japan and East Asian countries from 1997 to 2005 at the HS 9-digit level. Our empirical results show that the large portion of agri-food trade between Japan and East Asian countries is still one-way trade while IIT, particularly the share of VIIT has not grown rapidly from 1997 to 2005. Particularly, the fact that Japan imports high-quality agrifood products more than exports reflects in the opposite direction of quality ladder story based on Flam and Helpman type vertically differentiated trade model. The weak positive relationship between the share of VIIT and the factor endowment may be a result of the rising share of foreign direct investment due to multinational corporations in agri-food trade.