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On the Determinant of Trading Hub in East and Southeast Asia: Theory and Empirical Evidence1

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Abstract

Based on the existing hubness measure in the trade literature, we developed two modified trading-hub index in two directions, export-destination and import-source. Then we demonstrate the stylized fact of China-and-Japan’s double trading-hub, especially in export-destination sense, in East Asia since the early 1990s. After showing the dynamics of the twin-hub, more specifically the rising China-hub and shrinking Japan-hub, theoretical explanations, such as the home-market effect (HME), FDI and technology advantage etc. are provided. Finally, a panel data ranged from 1993 to 2014 of thirteen economies, including eleven economies in East Asia, USA and EU as a whole, are established to conduct empirical tests. In general, the empirical results support the role of HME, FDI and technology advantage for making a trading-hub, in terms of export-destination and/or import-sources.

Suggested Citation

  • Deng-Shing Huang & Yo-Yi Huang & Ching-lung Tsay, 2018. "On the Determinant of Trading Hub in East and Southeast Asia: Theory and Empirical Evidence1," IEAS Working Paper : academic research 18-A007, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    • Handle: RePEc:sin:wpaper:18-a007
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    More about this item

    Keywords

    : Double Trading-Hub; Export Destination Hub; Import-Source Hub; Homemarket effect; Technology Advantage;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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