The United States direct investment and intra-industry trade with Japan, the Four Tigers and China

Abstract

This study analyses the differences in Intra-Industry Trade (IIT) patterns between the USA and Japan, China and the Four Tigers: Korea, Singapore, Hong Kong and Taiwan. The estimated IIT indices show US–Japan trade with the highest level of IIT and US–China trade with the most rapid growth in IIT. The empirical data shows that US direct investment enhanced its IIT with East Asia countries as a whole and with Japan, the Four Tigers and China separately, but the effects of US FDI on IIT for the three groups are diverse.