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Horizontal and Vertical Intra-Industry Trade: New Evidence from Korea, 1991-1999

Author

Listed:
  • Byun Jae Jin

    (Assistant Minister, Fiscal Planning Bureau, The Ministry of Planning and Budget, Republic of Korea)

  • Lee Sang-Hyop

    (Assistant Professor, Department of Economics, University of Hawaii at Manoa, USA)

Abstract

This study tests the validity of the alternative hypotheses in the intra-industry trade (IIT) literature using information on Korea's trade between 1991 and 1999. The study refines previous studies by breaking down IIT into horizontally and vertically differentiated products, controlling for country fixed-effects, and using more variables relevant to Korea's industry data. The main results suggest that some conflicting results of previous empirical studies could be caused by the use of the aggregate approach itself. Most of all, variations of the level of IIT in Korea are better explained by vertical IIT. Furthermore, while the hypotheses derived from the theoretical models of horizontal IIT and vertical IIT are generally confirmed by the empirical analysis, the hypothesis of demand similarity was not supported. The results also favor the competitive market structure explanation for both types of IIT in Korea.

Suggested Citation

  • Byun Jae Jin & Lee Sang-Hyop, 2005. "Horizontal and Vertical Intra-Industry Trade: New Evidence from Korea, 1991-1999," Global Economy Journal, De Gruyter, vol. 5(1), pages 1-31, March.
    • Handle: RePEc:bpj:glecon:v:5:y:2005:i:1:n:3
    DOI: 10.2202/1524-5861.1036
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    Citations

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    Cited by:

    1. BELLINO, Antonella & CELI, Giuseppe, 2016. "The Migration-Trade Nexus in the Presence of Vertical and Horizontal Product Differentiation," CELPE Discussion Papers 137, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    2. Pittiglio, Rosanna, 2009. "The Intra-industry Trade for a Highincome Country: New Empirical Evidence for Italy," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 62(2), pages 233-254.
    3. Antonella Bellino & Giuseppe Celi, 2016. "The Role of Migration in the Variety and Quality of Trade: Evidence from Germany," German Economic Review, Verein für Socialpolitik, vol. 17(1), pages 1-25, February.
    4. Justyna Lapinska, 2016. "Determinant Factors Of Intra-Industry Trade: The Case Of Poland And Its European Union Trading Partners," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 11(2), pages 251-264, June.
    5. João Amador & Sónia Cabral, 2009. "Intra-Industry Trade in the Portuguese Economy: Products and Partners," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    6. Justyna Lapinska, 2014. "Determinants of Intra-Industry Trade in Agricultural and Food Products between Poland and EU Countries," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 3, pages 159-172, September.
    7. Sawyer, William C. & Sprinkle, Richard L. & Tochkov, Kiril, 2010. "Patterns and determinants of intra-industry trade in Asia," Journal of Asian Economics, Elsevier, vol. 21(5), pages 485-493, October.

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