Determinants of South Africa-US Intra-Industry Trade in Services
The study attempts to empirically identify factors that determine South Africa-US intra-industry trade (IIT) in selected services during the period 1994-2003. A number of hypotheses based on models of IIT for goods trade are tested. The study utilises an estimation methodology that is robust to heteroscedasticity, contemporaneous and serial correlation among errors. The empirical results, in principle, show that South Africa-US IIT in the selected services is determined by factors similar to goods-based ÒNorth-SouthÓ IIT studies. A key policy implication from the study is that South Africa should increase her IIT in unaffiliated services by minimising the differences with the US in income per capita, market size, FDI, and degree of market openness.
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