Intra-industry Trade and the Potential Impacts of Free Trade Agreement between Japan and Taiwan
Date Issued
2004
Date
2004
Author(s)
Chang, Kuo-I
DOI
en-US
Abstract
The purpose of this paper is to provide an economy-wide assessment of the potential impacts of FTA between Japan and Taiwan. Though inter-industry trade still accounts for the majority, its share in overall trade is declining. Instead, intra-industry trade (IIT), which can be further divided into horizontal IIT (HIIT) and vertical IIT (VIIT), is growing in importance. The popular GTAP-based CGE analysis which adopts the Armington assumption does not properly capture the impact of intra-industry trade. The Armington assumption is a simple setting of horizontal, symmetric product differentiation across product origins. The heavy dependence on this assumption makes simulation models difficult to describe vertical differentiation and the intra-industry division along the value chain. The CGE simulation result of tariff removal in the scheme of FTA tells us that almost all members of FTA obtain benefits in changes of EV. And larger positive impacts on EV are observed for larger members of FTA. Japan and Taiwan still have opportunities for developing closer relationship through bilateral capital interaction and much larger stimulus in developing more sophisticated production/distribution networks toward the scheme of FTA. The Japanese experience of intra-industry trade with Taiwan shows that policy measures which expand intra-industry trade are not limited to trade policy but also should include investment policies and various modes of liberalization, facilitation, and harmonization of economic institutions in order to accelerate integration process.
Subjects
垂直產業內貿易
自由貿易協定
產品差異化
水平產業內貿易
Horizontal intra-in
Vertical intra-industry trade
SDGs
Type
thesis