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Intra‐industry Trade, Reconsidered: The Role of Technology Transfer and Foreign Direct Investment

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  • Toshihiro Okubo

Abstract

This paper investigates novel determinants of intra‐industry trade (IIT) of late 1990s Japanese trade. Our empirical analysis shows that IIT is increased not only by the similarity of GDP and factor endowment but also by technology transfer via Japanese FDI. In particular, the current high proportion of Japanese IIT with Asian countries can be explained by technology transfer (licensing between headquarters and overseas affiliates) via FDI.

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  • Toshihiro Okubo, 2007. "Intra‐industry Trade, Reconsidered: The Role of Technology Transfer and Foreign Direct Investment," The World Economy, Wiley Blackwell, vol. 30(12), pages 1855-1876, December.
    • Handle: RePEc:bla:worlde:v:30:y:2007:i:12:p:1855-1876
    DOI: 10.1111/j.1467-9701.2007.01073.x
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    References listed on IDEAS

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    1. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, December.
    2. Kyoji Fukao & Toshihiro Okubo, 2004. "Why Has the Border Effect in the Japanese Market Declined? The Role of Business Networks in East Asia," Discussion papers 04016, Research Institute of Economy, Trade and Industry (RIETI).
    3. James R. Markusen & Keith E. Maskus, 2001. "A Unified Approach to Intra-Industry Trade and Direct Foreign Investment," NBER Working Papers 8335, National Bureau of Economic Research, Inc.
    4. Mary Amiti & Anthony J. Venables, 2002. "The Geography of Intra-Industry Trade," Palgrave Macmillan Books, in: P. J. Lloyd & Hyun-Hoon Lee (ed.), Frontiers of Research in Intra-Industry Trade, chapter 6, pages 87-106, Palgrave Macmillan.
    5. Kyoji Fukao; Toshihiro Okubo, 2004. "Why Has the Border Effect in the Japanese Market Declined?," IHEID Working Papers 12-2004, Economics Section, The Graduate Institute of International Studies.
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    Cited by:

    1. Toshihiro Okubo, 2009. "Firm heterogeneity and Ricardian comparative advantage within and across sectors," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(3), pages 533-559, March.
    2. Baldwin, Richard & Okubo, Toshihiro, 2019. "GVC journeys: Industrialisation and deindustrialisation in the age of the second unbundling," Journal of the Japanese and International Economies, Elsevier, vol. 52(C), pages 53-67.
    3. Fukao, Kyoji & Okubo, Toshihiro, 2011. "Why Has the Border Effect in the Japanese Machinery Sectors Declined?: The Role of Business Networks in East Asian Machinery Trade," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 26, pages 651-671.
    4. Tadashi Ito & Toshihiro Okubo, 2012. "New Aspects of Intra-industry Trade in EU Countries," The World Economy, Wiley Blackwell, vol. 35(9), pages 1126-1138, September.
    5. Justyna Lapinska, 2014. "Determinants of Intra-Industry Trade in Agricultural and Food Products between Poland and EU Countries," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 3, pages 159-172, September.
    6. Tadashi Ito & Toshihiro Okubo, 2016. "Product Quality And Intra-Industry Trade," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-22, September.
    7. ., 2012. "Trade–Investment Nexus and Intra-Industry Trade," Chapters, in: Trade and Industrial Development in East Asia, chapter 7, Edward Elgar Publishing.
    8. Tadashi Ito & Toshihiro Okubo, 2011. "New Aspects of Intra-Industry trade: Evidence from EU-15 countries," Discussion Paper Series DP2011-02, Research Institute for Economics & Business Administration, Kobe University.
    9. Alejandro Barragán-Ocaña & Gerardo Reyes-Ruiz & Samuel Olmos-Peña & Hortensia Gómez-Viquez, 2020. "Approach to the identification of an alternative technological innovation index," Scientometrics, Springer;Akadémiai Kiadó, vol. 122(1), pages 23-45, January.
    10. Toshihiro Okubo & Yuta Watabe & Kaori Furuyama, 2016. "Export of Recyclable Materials: Evidence from Japan," Asian Economic Papers, MIT Press, vol. 15(1), pages 134-148, Winter/Sp.
    11. Okubo, Toshihiro & Watabe, Yuta, 2023. "Networked FDI and third-country intra-firm trade," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 591-606.
    12. Helble, Matthias & Okubo, Toshihiro, 2008. "Heterogeneous quality firms and trade costs," Policy Research Working Paper Series 4550, The World Bank.
    13. Roy, Jayjit, 2017. "On the environmental consequences of intra-industry trade," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 50-67.
    14. Hayakawa, Kazunobu & Ito, Tadashi & Okubo, Toshihiro, 2017. "On the stability of intra-industry trade," Journal of the Japanese and International Economies, Elsevier, vol. 45(C), pages 1-12.

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