Empirical Studies of the Pattern of Bilateral Trade in the Asia-Pacific Region PDF Download

Author: Ahmad Fuad Rahmany
Publisher:
ISBN:
Category : Asia
Languages : en
Pages : 140

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Book Description
This dissertation reports the results of three empirical studies concerning the pattern of bilateral trade among countries of East Asia and the Pacific Rim countries--the so-called 'Asia-Pacific' region. The first study tests several hypotheses concerning the determinants of bilateral intra-industry trade for a sample of 15 Asia-Pacific countries. It is concluded that similarity in relative factor endowments between two countries results in a higher share of intra-industry trade in the total bilateral trade (Sii) between them; however, that similarity in country size results in a lower Sii, which contradicts some findings of previous studies. Economies of scale were not found, while distance and tariffs were found to be significant determinants of intra-industry trade. The interesting result was that intra-industry trade appears to be characterized by vertically differentiated products, suggesting that the pattern of specialization was affected by the difference in technological capabilities between the developed and less developed countries in the region. The second study uses gravity-type models to make inferences about relative factor intensities of several manufacturing groups and to test the Linder hypothesis that the more similar the per capita incomes between two countries, the larger the trade in manufactured goods between them. It is found that for 1980-1993 there occurred no significant change in capital-labor intensities in the composition of the manufacturing sectors. This suggests that the relocation of manufacturing from developed to developing countries that occurred in search for low wage workers did not necessarily lead to less capital-intensive technologies. The Linder hypothesis was not found to be supported. The third study assesses the desirability of regionalization in the Asia-Pacific region. ASEAN was not, while APEC was found to be a natural trading bloc. This implies that geographical proximity between ASEAN countries is not sufficient to create a natural trading bloc. The strongest natural trading partners were found to be the East Asian countries and the U.S., suggesting that policies that exclude the U.S. from the East Asian trading bloc are welfare-worsening. The formation of a free trade area among a group of countries may result in a welfare gain if their ex-ante intra-bloc trade exceeds their external trade.