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A Panel Data Analysis on China's Intra-Industry Trade in the Capital Goods Sector

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  • Zhu, Yiping

Abstract

This paper adopts the Hausman-Taylor 2SLS error components approach in estimating the determinants of China's Intra-Industry Trade (IIT) in the capital goods sector with its 26 partner countries. It disaggregates IIT into horizontal IIT (HIIT) and vertical IIT (VIIT). Capital goods final products and intermediates are separately estimated in order to reveal the differentiated trade patterns. It finds that economic similarity is very significantly negatively correlated with the intermediates IIT, but to a less extent correlated with the final products IIT. Factor endowment is of no significance in determining IIT in the intermediates, although it is significantly positively correlated with the final products IIT. Economic size is signi?cantly negatively correlated with both final products and intermediates IIT. Distance is not yet dead in impacting the level of final products IIT, but of less importance in influencing the intermediates IIT. China is exchanging intermediates in a less intraindustry manner with ASEAN nations. However, because VIIT is dominating TIIT, no significant differences exist between the estimation results of TIIT and VIIT.

Suggested Citation

  • Zhu, Yiping, 2009. "A Panel Data Analysis on China's Intra-Industry Trade in the Capital Goods Sector," IWH Discussion Papers 18/2009, Halle Institute for Economic Research (IWH).
    • Handle: RePEc:zbw:iwhdps:iwh-18-09
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    References listed on IDEAS

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    More about this item

    Keywords

    Intraindustrieller Handel; Panelökonometrie; Intra-Industry Trade; Panel Econometrics;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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