Trade Liberalization and Intra-Industry Specialization: The Australian Experience
AbstractMuch of the growth in trade among the industrialised countries, and more recently among countries in the Asia-Pacific region, has taken the form of intra-industry trade (IIT). Australia has historically had one of the lowest shares of IIT among OECD countries. This paper examines how Australia's IIT has changed in the 1980s in response to the process of trade liberalisation and completion of the CER pact with New Zealand. Towards this end, IIT indexes are estimated for Australia's multilateral and trans-Tasman trade for 1981 and 1991 for 132 industries using data at the 3 and 4-digit level of the SITC. The results point to a sharp increase in the share of IIT for both multilateral and trans-Tasman trade. We also find that the industries that had undergone the largest reductions in protection levels had also increased their shares of IIT quite considerably. These findings suggest that the short to medium run adjustment costs associated with trade liberalisation are likely to be lower than expected as a result of increased intra-industry specialisation. If IIT continues to grow in response to the on-going process of internationalisation of the Australian economy, then Australia's prospects for expanding its share in world trade, and particularly in the Asia-Pacific region, are likely to be significantly boosted.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number g-107.
Date of creation: Jun 1994
Date of revision:
Find related papers by JEL classification:
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Greenaway, David & Milner, Chris R, 1983. "On the Measurement of Intra-Industry Trade," Economic Journal, Royal Economic Society, vol. 93(372), pages 900-908, December.
- Lancaster, Kelvin, 1980. "Intra-industry trade under perfect monopolistic competition," Journal of International Economics, Elsevier, vol. 10(2), pages 151-175, May.
- Falvey, Rodney E., 1981. "Commercial policy and intra-industry trade," Journal of International Economics, Elsevier, vol. 11(4), pages 495-511, November.
- Jayant Menon & Peter Dixon, 1996. "How important is intra-industry trade in trade growth?," Open Economies Review, Springer, vol. 7(2), pages 161-175, April.
- Jones, Ronald W & Scheinkman, Jose A, 1977. "The Relevance of the Two-Sector Production Model in Trade Theory," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 909-35, October.
- Caves, Richard E, 1981. "Intra-Industry Trade and Market Structure in the Industrial Countries," Oxford Economic Papers, Oxford University Press, vol. 33(2), pages 203-23, July.
- Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-73, October.
- repec:ltr:wpaper:1990.04 is not listed on IDEAS
- Ravindra Ratnayake & Sisira Kumara Jayasuriya, 1990.
"Intra Industry Trade & Protection: Which way does the Causation go?,"
1990.04, School of Economics, La Trobe University.
- Ratnayake, Ravindra & Jayasuriya, Sisira, 1991. "Intra-industry trade and protection : Which way does the causation go?," Economics Letters, Elsevier, vol. 36(1), pages 71-76, May.
- Steven Globerman & James Dean, 1990. "Recent trends in intra-industry trade and their implications for future trade liberalization," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 126(1), pages 25-49, March.
- Alan Bollard, 1986. "The Economic Relations Agreement Between Australia and New Zealand: A Tentative Appraisal," Journal of Common Market Studies, Wiley Blackwell, vol. 25(2), pages 89-107, December.
- Finger, J M, 1975. "Trade Overlap and Intra-Industry Trade," Economic Inquiry, Western Economic Association International, vol. 13(4), pages 581-89, December.
- Jayanthakumaran, Kankesu & Pahlavani, Mosayeb, 2006.
"Australia and New Zealand CER Agreement and Breakpoints in Bilateral Trade: An Application of the Wald-type Test,"
Economics Working Papers
wp06-06, School of Economics, University of Wollongong, NSW, Australia.
- Jayanthakumaran, K. & Pahlavani, M., 2006. "Australia and New Zealand CER agreement and breakpoints in bilateral trade: an application of the Wald-type test," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(2).
- Jayanthakumaran, Kankesu, 2004. "An Empirical Assessment of the Impact of Intra-Industry Trade on Employment: Australia 1989/90-2000/01," Economics Working Papers wp04-11, School of Economics, University of Wollongong, NSW, Australia.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Horridge).
If references are entirely missing, you can add them using this form.