The Empirical Analysis Of Intra-Industry Trade Between Liaoning Province And Korea

Developing export-oriented economy is of strategic importance to Liaoning's rejuvenation. For this reason, South Korea, as Liaoning's key trade partner, is receiving more and more attention for its fast growing trade and strengthening ties with Liaoning in recent years. Based on existing researches, several pivotal questions were raised and explored in this paper namely, how is the potential of intra-industry trade between Liaoning and Korea? What are the key factors shaping and influencing such potential? And how the bilateral trade between Liaoning and Korea can be upgraded through leveraging these key factors? To answer these questions, the intra-industry trade theories were laid as the ground, and both qualitative and quantitative analyses were employed. To begin with, the paper analyzed the trade volume and structure between Liaoning and Korea. Following that, regression analysis was carried out to identify the key factors influencing Liaoning-Korea intra-industry trade. Last but not least, suggestions were put forward for Liaoning to better its trade development with Korea. Through trade volume and structure analysis, and G-L index measurement, the paper believed that Liaoning-Korea trade still has a considerable potential, and can be largely characterized as intra-industry trade. However, to be more specific, it is more vertical intra-industry trade than horizontal. In addition, the linear regression using 12 years trade data suggested that per capita income is positively related to Liaoning-Korea intra-industry trade, regional economic closeness is negatively related to it, and scale of economy together with FDI is in no significant relation to it. Based on above conclusions, the paper suggested that processing trade between Liaoning and Korea should be promoted to transfer from vertical labor division to horizontal division; scale of economy should be cultivated and brand name strategy featuring product diversification should be implemented; inward FDI from Korea should be upgraded with special focus placed on introducing horizontal investment; optimize and better bi-lateral trade structure between Liaoning and Korea: fully explore comparative advantage and enhance consciousness of intra-industry trade, improve exports' quality and grade, vigorously develop technology transfer.