How intra-industry trade is related to income difference and foreign direct investment in east Asia

Authors

Chan-Hyun Sohn
Zhaoyong Zhang, Edith Cowan UniversityFollow

Document Type

Journal Article

Publisher

MIT Press

Faculty

Faculty of Business and Law

School

School of Accounting, Finance and Economics

RAS ID

4005

Comments

Sohn, C. H., & Zhang, Z. (2005). How intra-industry trade is related to income difference and foreign direct investment in East Asia. Asian Economic Papers, 4(3), 143-156. Available here

Abstract

This paper investigates how intra-industry trade (IIT) is linked to cross-country income difference and foreign direct investment (FDI). We distinguish IIT as either horizontally or vertically differentiated, using bilateral exports and imports data for Japan and the remaining East Asian countries at the SITC five-digit level over 1990–2000. Our results show that the income difference has a negative relationship with the share of horizontal IIT, but a positive relationship with vertical IIT, and that cross-country FDI has a positive relationship with share of horizontal IIT and a negative relationship with share of vertical IIT.

DOI

10.1162/asep.2005.4.3.143