Cross-Country Analysis of Empirical Evidences of Intra-industry Trade in Manufactures for Dynamic Asian and Other Developing Economies: Implications for Economic Growth and Development

Abstract

This paper examines inter-country variations and growing volume of Intra-industry trade for thirty rapidly industrializing Asian and Latin American countries in the 1990s. With rapid industrialization, intra-industry trade in manufactures products have increased substantially. We find that intra-industry trade; (i) increases with per capita GNP; (ii) has a positive association with total trade to GDP ratio; (iii) grows with the share of manufacturing value-added in GDP and exports. Despite having positive impacts, the effect of regional integration schemes like ASEAN and LAIA is ambiguous depending on the relative strength of trade creation and trade diversion inside and outside the group.