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How Does Industrialization Affect the Structure of International Trade? the Japanese Experience in the Pacific Basin, 1975-85

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  • Sayuri Shirai

Abstract

This paper provides a theoretical model to address the issue of how industrialization affects the structure of international trade. Considering both horizontal and vertical product differentiation, the model shows that intra-industry trade increases when product quality improvement emerges in a developing country and when a difference in relative factor endowments between a developed and a developing countries shrinks. To promote understanding of the conclusions of the model, the paper also uses actual trade data between Japan and Indonesia and between Japan and Korea.

Suggested Citation

  • Sayuri Shirai, 1994. "How Does Industrialization Affect the Structure of International Trade? the Japanese Experience in the Pacific Basin, 1975-85," IMF Working Papers 1994/095, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1994/095
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