Increase In Intra-industry Trade Research Articles

Trade and Investment Cooperation Between Cambodia and Vietnam: Visible Progress and Hidden Issues

For a long time, geographically close countries were economically isolated from each other due to political factors, neglecting the obvious advantages of mutual cooperation. However, over the past two decades, the economic component has become the cornerstone of bilateral relations. Cooperation between Cambodia and Vietnam is developing dynamically and has a positive impact on the development of the economies of both countries. An increase in bilateral trade helps not only to meet the needs of the population and expand the sales market for products, but also to strengthen the export potential of Cambodia and Vietnam on the world market, what is more the latter at the expense of the former. There has also been an increase in intra-industry trade in recent years, indicating the beginning of vertical integration, taking into account identified comparative advantages. An important role is also played by Vietnam’s implementation of investment projects that fill empty niches, create the necessary infrastructure, make a significant contribution to socio-economic development, social security, stimulate the growth of budget revenues, and also create jobs in Cambodia. Vietnam has emerged as one of Cambodia’s most important trade and investment partners, increasing its presence in the neighboring market and playing an important role in the country’s development. Cambodia’s economy is booming, thanks in large part to developments in Vietnam’s (and, of course, China’s) sphere of influence. This confirms the theory of the benefits of flying “with a flock of geese.” Vietnam is historically and mentally inclined to help Cambodia through this influence, and apparently does not represent another model of relations. At the same time, there are also negative aspects of cooperation, such as inequality of trade and investment flows, Cambodia’s growing economic dependence on its neighbor, and weak integration. The study of the main aspects of Vietnam’s economic influence on Cambodia has become increasingly relevant in recent years. At the same time, the issue of Cambodian-Vietnamese trade and investment interaction has been poorly studied.

Trade Patterns and Determinants of International Specialization Structure between ASEAN and China

China and ASEAN are recognized as the most important markets in the world, hence they have emerged as global factories and parts production bases. And trade between China and ASEAN is rapidly expanding and ASEAN has taken position as one of China's three major trading partners. Over the last 20 years, there has been a rapid increase in intra-industry trade where differentiated products are traded within the same industries between China and ASEAN countries. Empirical analysis on determinants of the international specialization structure between China and ASEAN countries shows that the deepening structure of vertical international specialization between the two regions over the past 20 years has been directly influenced by variables representing national characteristics, such as distance (trading cost), common language, the size of the national economy and income gap as well as intra-regional foreign direct investment.

Trade Patterns and Determinants of International Specialization Structure between ASEAN and China

China and ASEAN are recognized as the most important markets in the world, hence they have emerged as global factories and parts production bases. And trade between China and ASEAN is rapidly expanding and ASEAN has taken position as one of China's three major trading partners. Over the last 20 years, there has been a rapid increase in intra-industry trade where differentiated products are traded within the same industries between China and ASEAN countries. Empirical analysis on determinants of the international specialization structure between China and ASEAN countries shows that the deepening structure of vertical international specialization between the two regions over the past 20 years has been directly influenced by variables representing national characteristics, such as distance (trading cost), common language, the size of the national economy and income gap as well as intra-regional foreign direct investment.

Labor Costs and Marginal Intra-Industry Trade: The Thailand Experience

Thailand’s international trade, exports in particular, expanded considerably after the major policy changes in 1990. According to this expansion, there was also a significant increase in intra-industry trade even though the major characteristic of Thailand trade is still inter-industry. However, intra-industry trade is hypothesized to reduce adjustment costs due to trade expansion and changes in trade compared to inter-industry trade. The main purpose of this paper is to examine the effects of increased Intra-Industry Trade (IIT) on the labor market adjustment cost, in view of the changes in Thailand’s pattern of trade over the post-1990 period. The study is focused on the hypothesis that Intra-Industry Trade (IIT) expansion entails lower factor adjustment costs (Smooth Adjustment Hypothesis-SAH). A dynamic panel data approach is employed. The results suggest a negative correlation between changes in employment and Marginal Intra-Industry Trade (MIIT) and confirmation of the SAH. Given the increase in IIT as a proportion of Thailand’s overall trade during the period under review, the adjustment in labor markets in the form of reduced employment from trade liberalization at that time is likely to have been less than that would have otherwise been expected.

Exports, imports and growth: New evidence on Italy: 1863–2004

The nexus between trade and economic growth in Italy has been widely debated by historiography. However, there are no long run analyses on this topic that cover the whole span from Unification to present days. This paper contributes to fill this gap by investigating the relationship between real exports, imports and GDP in Italy from 1863 to 2004 by using cointegration analysis and causality tests. The outcome suggests that these variables comove in the long run but the direction of causality varies across time. In the period prior to the First World War import growth led GDP growth that in turn led export growth. Conversely, in the post-Second World War period we have a strong bidirectionality between imports and exports consequent on the increase in intra-industry trade. We also find a weak support for export-led growth and growth-led imports. This suggests that exports were not the only or the main driver of economic growth. There was probably a multiplicity of factors at work, among which high rates of capital formation and the expansion of internal demand probably stood out.

U.S. Vertical and Horizontal Intra-Industry Trade Patterns with the Middle East

The main objective of this paper is to examine the extent of the U.S. vertical and horizontal intra-industry trade patterns with the countries in the Middle Eastern region. To deepen our understanding of the development of trade and investment relations between the U.S. and the Middle Eastern countries, we consider both the commodity structure of trade as well as the structure of investment. Based on the hypothesis that intra-industry trade is closely related to offshore production by multinational enterprises, then a model have been develop to capture the main determinants of vertical and horizontal intra-industry trade that explicitly includes the role of the U.S. foreign investment in the region. The model is tested empirically using detailed trade and investment data. The findings of the study indicated that foreign investment plays a significant role in the increase in intra-industry trade in recent years.

U.S. Vertical and Horizontal Intra-Industry Trade Patterns with the Middle East

The main objective of this paper is to examine the extent of the U.S. vertical and horizontal intra-industry trade patterns with the countries in the Middle Eastern region. To deepen our understanding of the development of trade and investment relations between the U.S. and the Middle Eastern countries, we consider both the commodity structure of trade as well as the structure of investment. Based on the hypothesis that intra-industry trade is closely related to offshore production by multinational enterprises, then a model have been develop to capture the main determinants of vertical and horizontal intra-industry trade that explicitly includes the role of the U.S. foreign investment in the region. The model is tested empirically using detailed trade and investment data. The findings of the study indicated that foreign investment plays a significant role in the increase in intra-industry trade in recent years.

Intra-industry Trade in an Enlarged Europe: Trend of Intra-industry Trade in the European Union and Its Determinants

In this paper I examine the evolution of intra-industry trade (IIT) in intra-European trade in the period of accession of the Central and Eastern European countries (CEEC). In order to identify changes in IIT in intra-European trade, I calculate the Grubel and Lloyd index for the static dimension and Brulhart A index for the dynamic dimension. Based on Grubel and Lloyd index, I conduct gravity-type empirical tests to verify determinants of IIT at the intra-European level. I find that CEECs experienced considerable increase in IIT, particularly during transitional periods before their accession. However, the level of IIT between CEECs is still considerably low. Given that a trade-investment nexus exists to explain IIT in intra-European trade, IIT in CEECs can increase further, as they receive more FDI from their neighbors.

An Account of Global Intra-Industry Trade, 1962-2006

This paper provides a comprehensive description of intra-industry trade patterns and trends, using data on more than 39 million bilateral trade flows. In 2006, 27 percent of global trade was intra-industry if measured at the finest (5-digit) level of statistical aggregation, and 44 percent if measured at a coarser (3-digit) level of statistical aggregation. The observed steady growth in global intra-industry trade since the early 1960s suggests a process of world-wide structural convergence: economies are becoming more similar over time in terms of their sectoral compositions. In particular since the 1990s, this trend appears to be driven to a significant extent by the international fragmentation of vertical production chains. Intra-industry trade is a high-income and middle-income country phenomenon: African trade remains overwhelmingly of the inter-industry type. Moreover, the observed increase in intra-industry trade was not accompanied by a comparable increase in marginal intra-industry trade, suggesting that trade-induced adjustment pressures remain potentially important.

Korea-Mexico Economic Relationship and FTA

During the last 20 years trade between Korea and Mexico has increased steadily, reaching $2.8 billion in 2003. This trade expansion will be further accelerated with the increase in intra-industry trade in the future. Mexico's chronic trade deficit against Korea, which is attributed to Korea's increasing investment in Mexico, has rather contributed to Mexico's exports to the American region. As Mexico expands its FTA networks, Korean companies are having difficulties in accessing the Mexican market. Considering this situation and the economic benefits of a Korea-Mexico FTA for both countries, we should first expand cooperation between private sectors, which is expected to facilitate a formal discussion on the Korea-Mexico FTA.

East-west intra-industry trade dynamics

Trade liberalization, integration and catching-up with the developed countries are often associated with an increase in intra-industry trade. We showed in the literature survey that the reduction of trade barriers is associated with the growth of intra-industry trade. We currently observe that the trade of the selected EU countries (Austria, Germany, Italy, Sweden and the Netherlands) with the CEECs (Czech Republic, Hungary, Poland, Romania, Slovakia, and Slovenia) follows this pattern as well. However, the increase of intra-industry trade is not uniform, but reflects different patterns of integration and progress of industrial restructuring.

A causality analysis of trade flows in the North American free trade agreement

This paper examines trade development in Mercosur and Pacific-Asian economies during the past decade from the perspective of regional integration. The main focus is the development of intraindustry trade. Globalization of corporate activities in the U.S. during the I980s and, more recently, in Japan and the new industrial economies stimulated in part by currency factors since late 1985 appear to have contributed to a significant increase in intra-industry trade among Pacific-Asian economies, particularly in technology-intensive products. In the case of Mercosur, bilateral trade between Argentina and Brazil is the principal element of success. Furthermore, the two biggest economies showed the highest intra-industry trade levels. The desegregated analysis showed that intra-industry trade in Mercosur is centered around products with high intensity in the use of human capital and technology. In addition, the analysis showed that an important part of intra-regional trade is centered around intermediate products and industries of capital goods.

Transnationalization and integration of production in Latin America

Trade among the ALAD countries has grown with exceptional vigour so far in the 1990s, especially in the branches of metal products, machinery and equipment, chemical products, and foodstuffs, beverages and tobacco. In order for this dynamic growth to be sustainable in the long term, these countries must develop their intra-industry trade by promoting reciprocal supply in those branches. The bulk of transnational productive capital in Latin America is concentrated in those branches, and it is in the metal products, machinery and equipment sector that the swiftest increase in intra-industry trade takes place and the link between the growth of intra-regional trade and a strong presence of transnational capital is most marked.

Cournot competition, intra-industry trade, and nonconstancy of marginal costs: A three-country case

In this paper we shall develop and investigate a three-country and two-commodity model of international trade with an imperfectly competitive good which is produced under increasing marginal costs by explicitly incorporating intra-industry trade between industrialized countries. The main results we obtain are: (1) the full optimal discriminatory tariffs levied by a third importing country are necessarily positive; (2) the imposition of tariff can cause an increase in intra-industry trade, and therefore (3) under certain conditions the importing country's intervention into the international market can be a Pareto superior policy for the world as a whole as well as for the country.