The document discusses various metrics for measuring intra-industry trade, including the Grubel-Lloyd index. It provides examples of intra-industry trade between the Philippines and Japan in 1998 across various industries. It also examines the intra-industry trade index values of different countries from 1988-2000 and explores explanations for intra-industry trade such as economies of scale and variety in demand.

1. Intra-Industry Trade

4. GL index (or IIT index) X M X M X M IIT=1 IIT=0 IIT=0.33

5. GL index (or IIT index) The intra-industry trade index of home country with a country j for an industry i is: The intra-industry trade index of home country with a country j is: where

6. IIT index (or GL index) of selected countries 1988-91 1992-95 96-2000 High and increasing IIT Czech Republic n.a 66.3 77.4 Slovak Republic n.a 69.8 76 Mexico 62.5 74.4 73.4 Hungary 54.9 64.3 72.1 Germany 67.1 72 72 United States 63.5 65.3 68.5 Poland 56.4 61.7 62.6 Portugal 52.4 56.3 61.3 High and stable IIT France 75.9 77.6 77.5 Canada 73.5 74.7 76.2 Austria 71.8 74.3 74.2 UK 70.1 73.1 73.7 Switzerland 69.8 71.8 72 Belgium-Luxembourg 77.6 77.7 71.4 Spain 68.2 72.1 71.2 Netherlands 69.2 70 68.9 Sweden 64.2 64.6 66.6 Denmark 61.6 63.4 64.8 Italy 61.6 64 64.7 Ireland 58.6 57.2 54.6 Finland 53.8 53.2 53.9 Low and increasing IIT Korea 41.4 50.6 57.5 Japan 37.6 40.8 47.6 Low and stable IIT New Zealand 37.2 38.4 40.6 Turkey 36.7 36.2 40 Norway 40 37.5 37.1 Greece 42.8 39.5 36.9 Australia 28.6 29.8 29.8 Iceland 19 19.1 20.1

9. Explaining intra-industry trade

10. An Alternative interpretation: intermediate goods

11. An Alternative interpretation: intermediate goods Internationalization of production

12. Japan’s Case

14. U.S. and Japan are important trading partners

15. Japan’s trade surplus and U.S. trade deficit

17. Pattern of inter-industry trade: Japan and U.S.

19. Intra-industry trade index Source: C. Fred Bergsten, Takatoshi Ito, and Marcus Noland (2001). No More Bashing . Institute of International Economics, Table 4.2. 0.43 0.28 South Korea 0.59 0.59 United Kingdom 0.50 0.56 Germany 0.62 0.55 United States 0.36 0.26 Japan 1997 1990

21. Horizontal IIT vs. Vertical IIT

23. HIIT vs. VIIT or HIIT VIIT

24. Korea’s Case Source: 오근엽 , 주혜영 (2000) “ 한국의 수평적ㆍ수직적 산업내무역과 국가특성 : OECD 국가와의 무역을 중심으로” , 국제통상연구 제 5 권 제 1 호

25. Korea’s IIT index 18.11 10.30 Italy 21.11 14.52 France 16.49 10.07 Germany 25.17 16.19 UK 33.00 26.25 Japan 44.16 26.55 US 14.76 8.15 Belgium-L 14.59 7.88 Denmark 9.63 7.40 Netherlands 10.19 7.61 Canada 12.73 7.61 Swiss 13.70 7.84 Finland 1997 1994 대상국 4.70 4.74 Norway 5.18 5.28 Austria 3.57 4.32 Ireland 5.67 5.62 Australia 6.02 6.14 Spain 6.24 6.39 Sweden 2.73 2.04 N. Zealand 2.64 1.94 Mexico SITC 5 digit 0 0.41 Greece 0.43 0.69 Iceland 2.33 1.49 Portugal 1997 1994 대상국

26. Korea’s HIIT & VIIT index 10.1 1.4 6.5 0.9 89.8 13.0 93.4 13.5 14.5 France 10.3 1.6 6.4 1.0 89.6 14.5 93.5 15.1 16.1 UK 14.9 3.9 9.3 2.4 85.0 22.3 90.6 23.7 26.2 Japan 12.1 3.2 7.5 1.9 87.8 23.3 92.7 24.5 26.5 US share in IIT share in total share in IIT share in total share in IIT share in total share in IIT share in total a=25% a=15% a=25% a=15% HIIT VIIT Total IIT

28. Empirical results - + + + VIIT (a=25%) - - + - HIIT (a=25%) -0.0576 (-3.32) -0.0041 (-0.06) -0.0118 (-0.50) DIST 0.98 92 -0.5980 (-3.52) 0.0006 (9.35) 0.2904 (1.12) -3.9673 (-12.29) 0.923 92 0.917 92 R 2 N 0.5841 (3.42) 0.4298 (2.59) DGDP 0.0002 (3.13) 0.0030 (4.27) SGDP 0.0578 (0.21) 0.0064 (0.22) DPCI -2.9074 (-7.19) -2.6022 (-6.44) Constant IIT

29. Export Similarity Index

31. Export Similarity Index (ESI) ESI = 1 ESI = 0 0 0 0 0 0 0 6 3 4 2 B A 0 0 10 0 20 0 0 3 0 2 B A 5 4 3 2 1 Prod 5 4 3 2 1 Prod

32. The effect of weak yen

34. ESI between China and Korea

35. Export Similarity between intra-regional exports and extra-regional exports Source: estimated from UN COMTRADE dataset 53.5 40.1 49.6 50.2 56.8 32.7 21.1 37.4 49.1 39.4 Par - 51.2 49.6 49.8 52.6 47.2 46.3 52.1 56.3 38.3 Chile 36.4 36.1 35.1 34.8 38.6 40.3 39.0 39.0 40.0 45.0 Brazil 32.3 33.0 33.3 30.5 34.5 34.0 35.2 39.5 38.0 - Arg 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 ESI between intra- & extra-regional exports: Mercosur

36. Structural Change Index

38. Structural Change Index (SCI) SCI = 0 SCI = 1 0 0 0 0 0 0 6 3 4 2 t1 t0 0 0 10 0 20 0 0 3 0 2 t1 t0 5 4 3 2 1 Prod 5 4 3 2 1 Prod