Frontiers of Research in Intra-Industry Trade

313 Pages·2002·2.539 MB·English

by  P. J. Lloyd, Hyun-Hoon Lee (eds.)

Frontiers of Research in
Intra-Industry Trade
Edited by
P. J. Lloyd
Frontiers of Research in Intra-Industry Trade
Also by P. J. Lloyd
INTERNATIONAL TRADE OPENING AND THE FORMATION OF
THE GLOBAL ECONOMY: Selected Essays of P. J. Lloyd
INTRA-INDUSTRY TRADE: The Theory and Measurement of
International Trade in Differentiated Products (with Herbert G. Grubel)
Frontiers of Research in

Intra-Industry Trade

Edited by
P. J. Lloyd
Ritchie Professor of Economics
University of Melbourne
Australia
and
Hyun-Hoon Lee
Professor of Economics,Division of Economics and International Trade
Kangwon National University
South Korea
Editorial matter, selection and Chapters 1 and 9 Q P. J. Lloyd

and Hyun-Hoon Lee 2002

Chapter 2 Q P. J. Lloyd 2002

Chapters 3±8, 10±14 Q Palgrave Macmillan Ltd 2002

Softcover reprint of the hardcover 1st edition 2002 978-0-333-97126-0
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DOI 10.1057/9780230285989
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Library of Congress Cataloging-in-Publication Data

Frontiers of research in intra-industry trade / edited by

P. J. Lloyd and Hyun-Hoon Lee.
p. cm.
Papers from a conference on the Frontiers of research

in intra-industry trade held at the University of Colorado

at Boulder on Aug. 24 ±26, 2000.

Includes bibliographical references and index.

1. Intra-industry tradeÐCongresses. 2. Intra-industry

tradeÐEconometric modelsÐCongresses. I. Lloyd,

P. J. (Peter John) II. Lee, Hyon-Hoon, 1959±

HF1414.35 .F76 2002

382±dc21 2001058217

10 9 8 7 6 5 4 3 2 1
11 10 09 08 07 06 05 04 03 02
Contents

List of Tables vii
List of Figures x
Acknowledgements xi
Notes on the Contributors xii
List of Abbreviations xiv
1 Introduction
P. J. Lloyd and Hyun-Hoon Lee 1
Part I Development of Intra-Industry Theory and
Measurement
2 Controversies Concerning Intra-Industry Trade
P. J. Lloyd 13
Part II Models of Intra-Industry Trade
3 Horizontal Intra-Industry Trade and the Growth of
International Trade
Nicolas Schmitt and Zhihao Yu 33
4 Intra-Industry Trade in Homogeneous Products
Daniel M. Bernhofen 49
5 Fragmentation and Intra-Industry Trade
Ronald W. Jones,Henryk Kierzkowski and Gregory Leonard 67
6 The Geography of Intra-Industry Trade
Mary Amiti and Anthony J. Venables 87
Part III Empirical Studies and Policy Issues of
Intra-Industry Trade
7 Marginal Intra-Industry Trade: Towards a Measure
of Non-Disruptive Trade Expansion
Marius BruÈlhart 109
v
vi Contents
8 Long-Term Trends in Intra-Industry Trade
Lionel Fontagne and Michael Freudenberg 131
9 Intra-Industry Trade in Services
Hyun-Hoon Lee and P. J. Lloyd 159
10 Intra-Industry Trade and the C±H±O Model:
evidence and Implications for Adjustments
David Greenaway and Chris Milner 180
Part IV Intra-Industry Trade, Affiliate Production
and FDI
11 A Unified Approach to Intra-Industry Trade and
Foreign Direct Investment
James R. Markusen and Keith E. Maskus 199
12 Factor Endowments and Intra-Industry Affiliate Production
by Multinational Enterprises
Karolina Ekholm 220
13 Globalization and Intra-Firm Trade: Further Evidence
Kiichiro Fukasaku and Fukunari Kimura 237
14 Intra-Industry Trade in Assets
Herbert G. Grubel 273
Author Index 291
Subject Index 293
List of Tables

3.1 Trade liberalization in the standard model
for d(T=P)ˆ 3 per cent 39
T=P
3.2 Trade liberalization and non-traded goods
for d(T=P)ˆ 3 per cent 44
T=P
5.1 US imports of televisions and parts from Mexico and
exports to Mexico, 1992±9 75
5.2 Grubel-Lloyd measure of intra-industry trade in
televisions, USA±Mexico, 1992±9 76
5.3 Grubel-Lloyd measure of intra-industry trade in
automobiles, USA±Mexico, 1992±9 77
5.4 Grubel-Lloyd measure of intra-industry trade in aircraft,
USA±Canada, 1992±9 79
5.5 Grubel-Lloyd measure of intra-industry trade in
semiconductors, USA±Canada, 1992±9 79
6.1 Benchmark case: 1 ˆ 2 ˆ 3, t1 ˆ t2 ˆ t3 95
6.2 Transport costs and demand elasticities:
2 <1 ˆ 3, t2 <t1 ˆ t3 97
8.1 Trade patterns and economic policy concerns 133
8.2 Share of trade types in EU-15 trade, 1999 141
8.3 Determinants of the share of trade types in bilateral
trade between EU-12 member countries, panel of 14
industries and 11 countries, 1980±94 146
8.4 EU-15 members trade by price±quality range, 1999 149
9.1 Share of services trade, 1992±6 164
9.2 Intra-industry trade in services by country, 1992±96,
1-digit industries 165
9.3 Intra-industry trade in services by country, 1992±6,
comparison between 1-digit and 2-digit industries 166
9.4 Intra-industry trade in services by industry, 1992±6 167
9.5 Determinants of IIT in services 171
9.6 Trade imbalance factors, 1992±6 174
10.1 Summary of some econometric evidence on relationships
between share of intra-industry trade in bilateral trade
and per-capita income differences 184
10.2 Summary of cross-sectional tests of the C±H±O
model for US±OECD trade, 1962±83 186
vii
viii List of Tables
10.3 Panel equation tests of C±H±O model for US±OECD
trade, 1962±83 187
10.4 Shares of horizontal and vertical IIT in USA's bilateral
trade in manufactures 188
10.5 Relative importance of vertical and horizontal IIT in
UK's bilateral intra-industry trade, manufactured
goods, 1988 189
10.6 Summary of cross-section and panel testing of vertical
IIT model for USA±OECD trade, 1989±92 192
10.7 Average levels of bilateral intra-industry trade in Asia,
1984 193
11.1 Grubel-Lloyd indices, 1987 and 1997 202
11.2 Changes in Grubel±Lloyd indices for affiliate sales
and total trade, 1987±97 203
11.3 Intra-industry affiliate sales logit regressions 213
11.4 Intra-industry trade logit regressions 215
11.5 Ratio of intra-industry affiliate sales to intra-industry
trade OLS regressions 217
12.1 Intra-industry affiliate production between Sweden
and other OECD countries 226
12.2 Grubel±Lloyd indices of intra-industry trade between
Sweden and other OECD countries 227
12.3 Non-linear estimations of logistic functions 229
12.4 Random effects estimation of transformed
logistic functions 231
12.5 Estimated change unexplained by included variables,
1986±98 232
13.1 Significance of foreign affiliates in manufacturing
industry of selected OECD countries, 1996 240
13.2 Patterns of globalization of industry, eight surveyed
industries 242
13.3 US intra-firm trade in goods, 1977±97 245
13.4 US exports and imports shipped to/by MOFAs by/to
non-bank US parents, by country of affiliate and
by product, 1977±94 247
13.5 Trade between parents and affiliates by country of
parent and country of affiliate, 1989 and 1994 249
13.6 Intra-firm transactions in the Basic Survey of Business
Structure and Activity (1994 F/Y) (1) 251
13.7 Intra-firm transactions in the Basic Survey of Business
Structure and Activity (1994 F/Y) (2) 254
List of Tables ix
13.8 Microdata regression results: manufacturing and

non-manufacturing 258

13.9 Microdata regression results: machinery industries 259

13A.1 US merchandise exports and imports associated

with non-bank US MNCs, 1977±97 262

13A.2 US merchandise exports and imports associated

with non-bank US affiliates of foreign MNCs, 1977±97 265

13A.3 Intra-firm trade data in the Basic Survey of Business

Structure and Activity (1994 F/Y) 267

14.1 Financial accounts for Germany, 1998 275

14.2 Direct investment, 1998 279

14.3 Direct investment by major regions, 1992±8 281

14.4 Portfolio investment flows, 1998 283

14.5 Portfolio investment ± equities, GL Index and

ranking, 1998 284

14.6 Other investments, flows 1998 287