China And South Korea Manufactured Intra-industry Trade Studies

With the rapid development of China’s economy and the upgrading of itsindustrial structure, as well as South Korea’s entering into the post-industrial era,great changes have taken place in the trade pattern between China and South Korea.As a result, the intra-industry trade has thus become an important part of bilateraltrade between these two countries. Meanwhile, manufactured goods have accountedfor a great share of Sino-Korea bilateral trade. Therefore, studying the intra-industrytrade of manufactured goods (SITC5-8categories) between China and South Korea isof great importance to understand the dynamic change of relative strength and thetransformation of collaboration model. Based on SITC statistics and with theintra-industry trade growth of Sino-Korea manufactured goods from1996to2011asresearch subject, this study explores the development, changing trends, collaborationpatterns and determinants of intra-industry trade.This study first examines the trade scale and changing trends of Sino-Koreamanufactured goods. And through the share that manufactured goods occupy, theirstatus in bilateral trade of these two countries is explored. Furthermore, with the G-Lindex, this paper deals with the level of intra-industry trade of manufactured goodsfrom two aspects. And it reveals that the intra-industry trade index is on the rise inmost years. To be specific, the SITC5and SITC7categories have displayed distinctcharacteristics of intra-industry trade. After differentiating different types ofintra-industry trade, the thesis explores the horizontal intra-industry trade and verticalintra-industry trade in two aspects. And it indicates that the Sino-Korea intra-industrytrade has transformed from being dominated by horizontal intra-industry trade into byboth horizontal and vertical intra-industry trade. Based on the combination of the G-Lindex and trade comparative index, the study made a comprehensive analysis of theintra-industry trade in recent years.In the study of the determinants of the Sino-Korea intra-industry trade, thispaper draws inspiration from scholars in China and abroad to design a mathematicmodel, which selects average per capita income, per capita income gap, market scalegap and other two variables as the subjects of regression analysis. The result revealsthat the direct investment from South Korea is an important factor in boostingSino-Korea intra-industry trade. Besides, per capita income gap and average marketscale are positive determinants while per capita income and market scale exert noinfluence on the intra-industry trade.