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Trade Openness and Vertical Integration: Evidence from the U.S. Manufacturing Sector

  • Aekapol Chongvilaivan


    (Institute of Southeast Asian Studies (ISEAS), 30 Heng Mui Keng Terrace, Singapore 119614)

  • Jung Hur


    (Department of Economics, Sogang University, 1 Shinsu-dong, Mapo-gu, Seoul 121-742, Korea; corresponding author)

The present article aims to empirically examine a relationship between trade openness and the pattern of vertical integration using the six-digit North American Industry Classification System (NAICS) of U.S. manufacturing data from 2002 to 2006. We use the index of vertical integration made out of inter-plant transfers data by the U.S. Census Bureau, and we consider three proxies of trade openness—import penetration, export shares, and trade penetration. The empirical results substantiate McLaren's (2000) theoretical proposition that trade openness undermines motives for vertical integration.

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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 78 (2012)
Issue (Month): 4 (April)
Pages: 1242-1264

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Handle: RePEc:sej:ancoec:v:78:4:y:2012:p:1242-1264
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