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

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Aekapol Chongvilaivan & Jung Hur, 2012. "Trade Openness and Vertical Integration: Evidence from the U.S. Manufacturing Sector," Southern Economic Journal, Southern Economic Association, vol. 78(4), pages 1242-1264, April.
  • Handle: RePEc:sej:ancoec:v:78:4:y:2012:p:1242-1264
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    File URL: http://dx.doi.org/10.4284/0038-4038-78.4.1242
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    Citations

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    Cited by:

    1. Buehler, Stefan & Burghardt, Dirk, 2013. "Globalization and Vertical Structure: An Empirical Investigation," Economics Working Paper Series 1310, University of St. Gallen, School of Economics and Political Science.
    2. Hea-Jung Hyun & Jung Hur, 2014. "Trade Openness and Vertical Structure: Evidence From Korean Firm-Level Data," Open Economies Review, Springer, vol. 25(4), pages 701-720, September.
    3. P. Giannoccolo & C. Vergari, 2015. "Revealing incentives for vertical integration in the presence of glocal policies," Working Papers wp1015, Dipartimento Scienze Economiche, Universita' di Bologna.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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