The Empirical Analysis Of Intra-industry Trade Trends In East Asia

This paper focuses on the development of intra-industry trade in East-Asia to testify its existence and trends. Besides, the solutions of China to promote intra-industry trade are also examined.According to traditional trade theory, international trade should be based on comparative advantages and factor endowments. That is to say, developing countries should export labor-intensive products or resources-intensive products, and import capital-intensive products or technology-intensive products in the same time. So generally speaking, the similarities between countries would have reverse relation with trade volumes. But after World War II .especially in the recent 30 years, intra-industry trade which means the mutual trade of same kind products between developed countries flourished. Furthermore, the trend that intra-industry trade would replace inter-industry trade and become the mainstream of world trade can be seen, which could not be explained by traditional trade theory. After long term development, the separate system of intra-industry trade research has come into being which called new trade theory. This theory bases on the market structure of non-pure competition and the precondition of economics of scale, and its discrepancy with reality is smaller. This theory considers that trade is not only the result of comparative advantages, but also that of economics of scale or the increase of returns. In the market of non-pure competition, many countries can pursue production specialization and deal with each other because of economics of scale or products differences, even if there is not or very little difference in technology and factor endowments among them. If some countries have a high level of development, the market capacity is little, the trade barriers are low, the linguistic and culture difference are not significant, and if they belong to a same duty union, the intra-industry trade among them would be active.In view of this, most of previous research focused on developed countries,and the development of intra-industry trade in developing countries was overlooked, especially when it comes to empirical research. Based on the recent trade data and its statistics analysis, this paper testified the significant existence of intra-industry trade in East-Asia, most members of which are developing countries or areas. Besides, data analysis indicates that with the economic development of East-Asia, intra-industry trade also increased rapidly.Because East-Asia are the major trade partners of China, the development of intra-industry trade in these countries offer us a good chance to optimize our trade structure and establish our backbone industries. Finally this paper gave some feasible suggestions on how to take full advantage of this trend.