| Trade in differentiated manufactured goods from the same industry, between developed economies characterized by similar relative factor endowments, has been observed to be an important feature of international trade patterns since the 1960's. While the traditional, factor-proportions model of international trade still retains good explanatory power, it is not able to satisfactorily encompass this phenomenon of intra-industry trade (IIT) A number of new theoretical models have arisen, incorporating notions of (internal) economies of scale and preference diversity, which provide a range of testable propositions that seek to explain the proportion of a country's gross trade which is IIT in nature. Empirical investigation has focused on the trade of developed economies, with a general consensus emerging regarding the significance of a variety of industry and country level characteristics as factors influencing IIT.;This study extends the analysis of the structure and determinants of IIT to the bilateral trading arrangements of Malaysia, the Philippines and Singapore, three members of the Association of South-East Asian Nations (ASEAN). These countries are all developing economies, representing countries at different levels of development. This study covers the period 1970-1989, enabling inferences to be drawn concerning the impact of the development process through time on IIT. IIT is found to be an important feature of the trade of these developing economies and has increased over time. The mix of products traded and the relative importance of trading partners has also changed as development has proceeded. As a result the three economies have become increasingly integrated into the world economy. Many of the factors influencing the IIT of developed economies are also found to be significant for these developing economies. A study of intra-ASEAN IIT provides some evidence regarding the potential for greater economic integration within this group of countries. |
