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An Analysis of Intra-Industry Trade between Japan, Malaysia and China

Author

Listed:
  • M. Affendy Arip

    () (Faculty of Economics and Business, Universiti Malaysia Sarawak)

  • Lau Sim Yee

    () (Faculty of Economics, Graduate School of International Economics and Business Administration, Reitaku Univeristy, Japan)

  • Madono Satoru

    () (Faculty of Economics, Graduate School of International Economics and Business Administration, Reitaku Univeristy, Japan)

Abstract

This paper investigates the bilateral trade pattern between Japan, Malaysia and China (JMC) using the intra-industry trade (IIT) index analysis. Our empirical findings revealed the following. First, China shows a higher degree of IIT relation with Japan vis-à-vis Malaysia. Second, to the extent of whether rapid manufacturing development in China is affecting Malaysia’s export to Japan, our analytical evidence demonstrates that the degree of overlapping exports to Japan by Malaysia and China has increased over time. Although this trend appears to be an indication of increasing competition from China in relation to Malaysia’s products in the Japanese market, our empirical evidence – detailing the degree of product similarity between Malaysia and China using the unit value (UV) measurement – shows that both countries’ exports actually comprise mainly vertically differentiated products or different segments of the market in Japan. Nevertheless, the results also reveal that, compared to Malaysia, China is rapidly increasing its export share in horizontally differentiated products or similar market segments.

Suggested Citation

  • M. Affendy Arip & Lau Sim Yee & Madono Satoru, 2011. "An Analysis of Intra-Industry Trade between Japan, Malaysia and China," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 3(1), pages 1-30, April.
    • Handle: RePEc:umk:journl:v:3:y:2011:i:1:p:1-30
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    References listed on IDEAS

    as
    1. Lionel Fontagné & Michael Freudenberg & Guillaume Gaulier, 2005. "Disentangling Horizontal and Vertical Intra-Industry Trade," Working Papers 2005-10, CEPII research center.
    2. Lionel Fontagné & Michaël Freudenberg, 1997. "Intra-Industry Trade: Methodological Issues Reconsidered," Working Papers 1997-01, CEPII research center.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    - Japan; Malaysia; China; intra-industry trade; SITC Rev.2; ISIC Rev.3;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L70 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - General

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