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Article
Publication date: 2 August 2011

Horácio C. Faustino and Nuno Carlos Leitão

This paper aims to examine the determinants of vertical intra‐industry trade (VIIT) in the automobile components industry between Portugal and the European Union 27…

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Abstract

Purpose

This paper aims to examine the determinants of vertical intra‐industry trade (VIIT) in the automobile components industry between Portugal and the European Union 27 (EU‐27) and the BRIC countries (Brazil, Russia, India and China) during the period 1995‐2006.

Design/methodology/approach

The paper formulates some theoretical hypotheses that may explain the fragmentation of the production in the automobile industry. These hypotheses are tested using a dynamic panel data analysis. The estimates are more reliable because the instruments used control for the potential endogeneity of the explanatory variables.

Findings

The results indicate that VIIT is a positive function of the difference in per‐capita GDP between Portugal and its trading partners, confirming the Linder hypothesis. Moreover, there is statistical evidence that geographical distance influences negatively this type of VIIT between Portugal and the EU‐27 only. The results do not confirm the hypothesis that there is a positive correlation between differences in endowments and VIIT in the automobile components sector.

Originality/value

This paper confirms some relevant theoretical hypotheses on the causes of the fragmentation/outsourcing. The good results obtained with the Arellano and Bond GMM system estimator suggest that the building of dynamic theoretical models will be of interest to academic researchers in fragmentation theory.

Details

Journal of Economic Studies, vol. 38 no. 3
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 10 November 2014

Hoan Thanh Phan and Young Ji Jeong

The purpose of this paper is to empirically investigate the patterns and determinants of intra-industry trade (IIT) in manufactures between Korea and selected ASEAN…

3624

Abstract

Purpose

The purpose of this paper is to empirically investigate the patterns and determinants of intra-industry trade (IIT) in manufactures between Korea and selected ASEAN countries in the period of 1997-2011.

Design/methodology/approach

The effects of country-specific determinants of IIT in manufactures are examined using panel data approach.

Findings

The results show that the IIT of Korea-ASEAN manufactures is positively correlated with the average income levels and foreign direct investment inflow, while it is negatively correlated with the differences in factor endowments between Korea and selected partners. Overall, market size, income dissimilarity and factor endowments are indicated as most relevant determinants of IIT in manufactures between Korea and ASEAN countries.

Originality/value

Despites the importance of Korea-ASEAN IIT, studies on this subject are limited. This paper examines the pattern and determinants of IIT and its components in Korea-ASEAN manufactured trade. The paper also suggests the policy implications for the development of IIT between two parties.

Details

Journal of Economic Studies, vol. 41 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 30 April 2018

Nguyen Khanh Doanh and Yoon Heo

This study investigates the patterns and determinants of Korea’s horizontal intra-industry trade by employing a dynamic panel data analysis. The main findings of the study…

Abstract

This study investigates the patterns and determinants of Korea’s horizontal intra-industry trade by employing a dynamic panel data analysis. The main findings of the study are as follows. An increase in the market size of both trading partners is associated with a higher level of horizontal intra-industry trade. Dissimilar economic sizes and per capita incomes have a negative effect on trade in horizontally differentiated products. Geographical distance and trade imbalance serve as obstacles to horizontal intra-industry trade. These findings have policy implications for reconsidering the orientation of promoting trade. Inclusive economic growth in the region, taking advantage of neighboring nations and making efforts to reduce trade imbalances between trading economies, can accelerate further trade expansion through horizontal intra-industry trade.

Details

Journal of International Logistics and Trade, vol. 16 no. 1
Type: Research Article
ISSN: 1738-2122

Keywords

Article
Publication date: 9 August 2021

Sagnik Bagchi and Surajit Bhattacharyya

This paper aims to explore whether India’s export basket in the bilateral intra-industry trade (IIT) with two of its top trading partners characterize robust export…

Abstract

Purpose

This paper aims to explore whether India’s export basket in the bilateral intra-industry trade (IIT) with two of its top trading partners characterize robust export earnings or not. This is pertinent for two reasons. First, India has a persistent problem of current account deficit for over decades now. Second, whether India’s export diversification strategy by participating in global value chains to improve export share in the world market led to the problem of the fallacy of composition.

Design/methodology/approach

This study considers bilateral trade data between India-USA and India-China at the HS-6 digit level over the period 1990–2018. The magnitude of total IIT is computed using the Grubel and Lloyd (1971) index. This paper then uses the unit value dispersion criterion to disentangle the magnitude of total IIT into horizontal and vertical IIT. Through a stepwise econometric exercise, this paper explores the attributes of exported goods in the IIT basket in terms of the directions of ToT, export share and export-price elasticity.

Findings

Across the two country pairs, the major contributors to the upsurge in IIT are five manufacturing industry groups of chemical, plastics and rubber, textiles, base metals and machinery and mechanical appliances. Across the industry groups, the dominant form of IIT has been low vertical IIT. Most of the industry groups do not characterize robust export earnings as the commodity groups have an elastic demand and an increasing trend of Terms of Trade (ToT). The exceptions are the industry groups of chemicals and textiles in India-China and India-USA, respectively.

Research limitations/implications

The concern of slim export earnings in most industry groups offers scepticism in maintaining the sustainability of the current account. The problem of the fallacy of composition also cannot be ruled out given the dominance of low vertical IIT. This study argues that these industry groups need to engage in labour market reforms and require access to easy credit to achieve competitiveness in the world market.

Originality/value

The analysis performed in this paper attempts to integrate the Prebisch-Singer hypothesis in the context of IIT. Empirical evidence to such an issue is not profound.

Details

International Journal of Development Issues, vol. 20 no. 3
Type: Research Article
ISSN: 1446-8956

Keywords

Article
Publication date: 31 August 2012

J. Alexander Nuetah, Yitian Xiao and Pei Guo

The purpose of this paper is to provide readers with the main findings and conclusions of papers presented at the 2011 CAER‐IFPRI International Conference held under the…

308

Abstract

Purpose

The purpose of this paper is to provide readers with the main findings and conclusions of papers presented at the 2011 CAER‐IFPRI International Conference held under the theme “Is China entering a high food price era?”

Design/methodology/approach

The authors conduct a desk review of papers presented at the conference and provide a brief summary of the analytical tools, and main findings and conclusions of each presentation.

Findings

These reviews show that, while there seems to be an increase in the prices of agricultural commodities on the Chinese market, in real terms, these rises fall far below the increases in the prices of industrial commodities. Thus, expert views remain divided on whether China is entering an era of high food price.

Originality/value

The discussions initiated by the conference theme aroused researchers' curiosities for further studies into understanding the current level of food prices in China.

Details

China Agricultural Economic Review, vol. 4 no. 3
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 31 March 2020

Inkyo Cheong and Jeongho Yoo

Comprehensive studies examining how Korean e-commerce trade works are currently limited. This study seeks to explore whether Korea’s e-commerce trade is more applicable to…

Abstract

Comprehensive studies examining how Korean e-commerce trade works are currently limited. This study seeks to explore whether Korea’s e-commerce trade is more applicable to traditional trade theory or to modern theories. According to our analysis, the share of intra-industry trade (IIT) in modern trade theory is less than that of general trade for Korean e-commerce. Therefore, trade based on comparative advantage can be more valid in explaining e-commerce trade. From results in analyzing the gravity model, it was found that Korea’s e-commerce exports are higher as IIT with its FTA partners. In contrast, it is found that the lower the proportion of e-commerce trade, the higher chance for the import growth. Lastly, this study looked at what kind of comparative advantage is realized through imports. While Korea has been mostly exporting goods of high quality, its major trading partners import products based on price and selection of goods. In order for Korea’s e-commerce to grow, a more strategic approach is necessary. A strategy of high price based on superior quality is not effective, and as e-commerce has radically reduced sales and marketing costs, so a price reduction needs to be reflected in the price of goods for consumers.

Details

Journal of International Logistics and Trade, vol. 18 no. 1
Type: Research Article
ISSN: 1738-2122

Keywords

Content available
Book part
Publication date: 11 August 2017

Abstract

Details

Core-Periphery Patterns Across the European Union
Type: Book
ISBN: 978-1-78714-495-8

Article
Publication date: 5 March 2018

Jong Kyou Jeon

The purpose of this paper is to examine the relationship between trade integration and intra-regional business cycle synchronization using value-added trade data. Most…

Abstract

Purpose

The purpose of this paper is to examine the relationship between trade integration and intra-regional business cycle synchronization using value-added trade data. Most empirical studies analyzing the relationship between trade integration and business cycle synchronization use gross trade data which suffer from double-counting. Double-counting distorts the empirical results on the estimated relationship between trade integration and business cycle synchronization. This paper explores the relationship using value-added trade data to be free from distortions caused by double-counting.

Design/methodology/approach

Gross trade data on exports and imports are decomposed into sub-categories following Koopman et al. (2014). Then, value-added data on exports and imports without double-counted terms are built to measure value-added bilateral trade intensity and value-added intra-industry trade intensity. Using this value-added trade intensities, the author run panel regressions for Europe and East Asian countries to examine how value-added trade intensities are correlated with output co-movements.

Findings

The paper finds that for European countries, the positive association between trade and business cycle co-movements is more evidently observed and the role of intra-industry trade increasing the business cycle synchronization is also more clearly revealed by value-added trade data. On the other hand, for East Asian countries, value-added trade data reveal that it is very uncertain whether increased trade contributes to stronger synchronization of business cycles and intra-industry trade is truly the major factor which deepens the business cycle co-movements.

Research limitations/implications

First, the paper examines the relationship only by running static panel regression. There is a need to employ different methodologies such as instrumental variable regression or dynamic panel regression. Second, financial integration and policy coordination within a region are also other relevant factors which influence the intra-regional business cycle synchronization. There is a need to examine the relationship using value-added trade data with the variables measuring the degree of financial integration and policy coordination. Third, value-added trade data used in this paper has limited coverage of East Asian countries. There is also a need to extend the value-added data set to cover more countries and industries.

Originality/value

Most empirical literature studying the relationship between trade integration and business cycle synchronization rely on gross trade data. This paper would be the first attempt to study the relationship using value-added trade data. Duval et al. (2014) also use value-added data, but their value-added data are not supported by a solid accounting framework which decomposes a country’s gross exports into various value-added components by source and additional double-counted terms. Value-added data in this paper computed based on Koopman et al. (2014) are the total domestic value exports that are ultimately consumed abroad via final and intermediate exports. The author believes that value-added data in this paper are most relevant in estimating the relationship between trade integration and business cycle synchronization.

Details

Journal of Korea Trade, vol. 22 no. 1
Type: Research Article
ISSN: 1229-828X

Keywords

Book part
Publication date: 11 August 2017

Gabriela Carmen Pascariu and Ramona Ţigănaşu

The unequal distribution of economic activities, transposed in economic, social and territorial disparities is the general characteristic of the European economy. Gaps…

Abstract

The unequal distribution of economic activities, transposed in economic, social and territorial disparities is the general characteristic of the European economy. Gaps increased in the context of European Union (EU) enlargement towards Eastern and Central Europe and of the economic crisis, thus bringing new differentiations among member states’ economies. The main aim of the chapter is to emphasise the centre-periphery differentiations in the European economy, by using a composite index of peripherality, in order to better understand the determinants of growth and convergence in Central and Eastern European countries and to reach normative conclusions for increasing Cohesion Policy (CP) effectiveness. The first part of the chapter provides a short overview of the main theories and models of the peripherality analysis and the relationships between the centre and the periphery, in order to find out how this analysis relates to the research in the field. The second part provides a comparative analysis of the evolution of European economies during 2003–2014, in order to find out whether the EU enlargement process stabilised the EU core-periphery pattern or, on the contrary, the process of core-periphery structural convergence occurred. The third part includes the suggested model of analysis (methodology, data, and main results) from a multidisciplinary perspective, underlining the centre-periphery differentiations on the two axes, North–South and West–East. The results have been interpreted in conclusions, with a focus on their relevance for the European CP challenges.

Article
Publication date: 7 August 2017

Muhammad Aftab and Ijaz Ur Rehman

This paper aims to examine the influence of exchange rate risk on the bilateral trade of two closely connected East Asian open economies – Malaysia and Singapore – at…

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Abstract

Purpose

This paper aims to examine the influence of exchange rate risk on the bilateral trade of two closely connected East Asian open economies – Malaysia and Singapore – at industry level.

Design/methodology/approach

This study estimates import and export demand models considering 65 import and 65 export industries of Malaysia, with Singapore using monthly data over the period 2000-2014. Generalized Auto Regressive Conditional Heteroskedasticity (GARCH) model is used to measure the exchange rate risk, and autoregressive distributed lag (ARDL) approach to co-integration is used to examine the study empirical models.

Findings

The findings suggest that exchange risk has an impact on a moderate number of industries in the short run; however, this influence endures in very few industries in the long run. It is interesting to note that exchange rate volatility expedites import demand for the large Malaysian import industries like gas and plastic.

Originality/value

No prior study has explored the topic at industry level focusing on the bilateral trade flows between Malaysia and Singapore. This research serves important implications while thinking about exchange rate risk and trade linkage in a case of open economies trade pairs that are highly integrated in presence of a variety of bilateral trade agreements and economic groupings.

Details

Studies in Economics and Finance, vol. 34 no. 3
Type: Research Article
ISSN: 1086-7376

Keywords

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