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Intra-Industry Trade
Definition ,[object Object],[object Object]
Measuring intra-industry trade ,[object Object],International trade between The Philippines (RP) and Japan; 1998* SITC Exports from RP Imports into RP GL index 8 Miscellaneous manufactured articles 383,167 576,412 0.80 81 Prefabricated buildings 4,147 2,186 0.69 82 Furniture and parts thereof 42,332 6,155 0.25 83 Travel goods, handbags and similar containers 4,804 67 0.03 84 Articles of apparel and clothing accessories 115,627 3,255 0.05 85 Footwear 13,283 920 0.13 87 Prof. scientific & controlling instruments 24,091 175,018 0.24 88 Photographic apparatus 72,174 123,333 0.74 89 Miscellaneous manufactured articles 106,709 265,477 0.57
GL index (or IIT index) X M X M X M IIT=1 IIT=0 IIT=0.33
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
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
Measuring intra-industry trade ,[object Object]
Explaining intra-industry trade ,[object Object],[object Object]
Explaining intra-industry trade
An Alternative interpretation:  intermediate goods
An Alternative interpretation:  intermediate goods Internationalization of production
Japan’s Case
U.S.-Japan trade ,[object Object],[object Object],[object Object],[object Object],[object Object]
U.S. and Japan are  important trading partners
Japan’s trade surplus and U.S. trade deficit
Pattern of  inter-industry trade ,[object Object],[object Object],[object Object],[object Object]
Pattern of inter-industry trade: Japan and U.S.
Intra-industry trade ,[object Object],[object Object],[object Object]
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
Japan’s  low intra-industry trade ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Horizontal IIT vs. Vertical IIT
HIIT vs. VIIT ,[object Object],[object Object]
HIIT vs. VIIT or HIIT VIIT
Korea’s Case Source:  오근엽 ,  주혜영  (2000) “ 한국의 수평적ㆍ수직적 산업내무역과 국가특성 : OECD  국가와의 무역을 중심으로” ,  국제통상연구 제 5 권 제 1 호
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
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
Determinants of IIT ,[object Object],[object Object],[object Object],[object Object],[object Object]
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
Export Similarity Index
[object Object],[object Object],[object Object],Export Similarity Index (ESI)
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
The effect of weak yen
The effect of weak yen ,[object Object],[object Object],[object Object]
ESI between China and Korea
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
Structural Change Index
[object Object],[object Object],Structural Change Index (SCI)
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
Structural Change Index (SCI) ,[object Object],[object Object],[object Object]
 

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Intra Industry

  • 2.
  • 3.
  • 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
  • 7.
  • 8.
  • 10. An Alternative interpretation: intermediate goods
  • 11. An Alternative interpretation: intermediate goods Internationalization of production
  • 13.
  • 14. U.S. and Japan are important trading partners
  • 15. Japan’s trade surplus and U.S. trade deficit
  • 16.
  • 17. Pattern of inter-industry trade: Japan and U.S.
  • 18.
  • 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
  • 20.
  • 21. Horizontal IIT vs. Vertical IIT
  • 22.
  • 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
  • 27.
  • 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
  • 30.
  • 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
  • 33.
  • 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
  • 37.
  • 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
  • 39.
  • 40.