Trade policy and distortions in intra-Asian trade

Abstract

This paper analysis wheather the level of tariffs and non-tariff barriers affect the pattern of inter-industry trade within Asia. The Heckscher–Ohlin theorem is based on the assumption of efficient resource allocation. However, markets in many developing countries protect the domestic production by trade barriers. We would therefore expect the pattern of production and trade not to reflect comparative advantages perfectly. It is found that import charges and non-tariff barriers have a significant positive impact on capital intensities in net export.