INTRA-INDUSTRY TRADE IN THE MANUFACTURING SECTOR AMONG THE ASEAN ECONOMIES

Abstract

This paper attempts to understand the trends of intra-industry trade among the ASEAN nations, as well as to account for the low net trade figures among the ASEAN economies. By utilizing the G-L index to calculate the intra-industry trade indices for the ASEAN countries, this paper strives to shed some light on the veridical degree of trade expansion taking place among the ASEAN nations. While the common belief is that intra-industry trade is only prevalent in industrialized countries, my study tries to prove that intra-industry trade is also predominant in developing countries such as the ASEAN economies. The implication from my study is that with more industrialization, trade liberalization will stimulate trade of the intra-industry type and that trade liberalization actually encourages a greater degree of intra-industry trade. Given the amount of inter-dependence and integration taking place between the ASEAN nations studied, the trend of intra-industry trade seems likely to be self-sustaining, especially with the formation of AFTA.