An Empirical Study On Intra-industry Trade Of Services Between China And South Korea

The tenth round of China and South Korea Free Trade Area (FTA) negotiations wasinitiated on March17,2014in South Korea, which involves substantive negotiations oncommodity trade, service trade and so on. This is a very important round of the secondnegotiation period. And from now, the negotiations of the FTA will enter the important stageof some special issues and sensitive issues, and service will be one of them. Theestablishment of this FTA will provide a mutual-benefit opportunity for both China andSouth Korea.After the signing of GATS in1994, the structure of the international trade was in aseries of change which means trade in service is becoming more and more important.Services and service trade are drawing more attentions from all countries because of theirpositive effects on the economy. Especially, in the era of information economy, thedevelopment of service will be more important. What’s more, the level of the intra-industrycan prove the level of economy.This paper selects China and Korea because the two countries have been in a goodeconomic relationship. In this paper, a series issues about intra-industry will be analyzed.Related policy suggestions will be put forward after the analysis of some basic facts such asthe levels and influence factors about intra-industry. The first chapter is the preface of thispaper which mainly generalizes the background, significance, purpose, main contents andthe structure arrangement. Besides, some basic concepts and measurement indexes areillustrated in the part of literature review. The second chapter mainly illustrates the basicfacts of service and trade in service both in China and Korea, which generalizes aspects suchas the contributions of service to the increase of GDP, the structure of service industry, totalservice trade and the structure of service trade. As a conclusion, both the two countries havea good future of service and service trade but still a gap between them with those developedcountries. Finally, this chapter analyses the bilateral service trade of China and South Koreawhich find a well potential of their service trade. Therefore, the two countries need takesome measures to adjust the structure of their service. The third chapter quantitativelyanalyses the level of intra-industry trade of service between China and South Korea. Themeasurement index such as G-L index, MIIT index, VIIT index and HIIT indexes are chosento measure the level statically and dynamically. Besides, this chapter tells the type ofintra-industry. The forth chapter empirically analyses the factors that effect the level ofintra-industry service trade between China and South Korea. Firstly, this chapter tries to make common and particular analysis on the causes of formation of the intra-industry to findthe origin of factors in respect of cause. Finally, this chapter generalizes the main factors andtries to analyze the relativity between factors and the level of intra-industry by using relateddata and relativity scatter diagrams. The fifth chapter concludes this paper and makes aconclusion. On the basis of the analysis of basic facts, indexes analysis and factors analysis,this paper tries to put forward some policy suggestions to promote the service of China andthe intra-industry trade of services between China and South Korea.