According to the export and import data of China, USA and World from 2000 to 2007, I calculate the trade combined degree index using formula (1) and draw the chart of the trade combined degree index between China and USA. The share of intra-industry job turnover in an industry’s total job turnover is used as a proxy for the degree of low-cost labour-market adjustment. ≤ Agricultural trade is one of the most sensitive and the most controversial issues in Sino-US trade relations. In the forth chapter, I choose agriculture as a specific industry to study the issue of complementarity between China and USA end on the Chapter 5 with conclusion and some policy proposals. However if the RCAia >1 then it means the industry a in country i is at a comparative advantage. It is usually applied to international trade, where the same type of goods or services are both imported and exported. In addition, in this pattern, the products are directly sold to the international market. Some writers have still made attempts to explain the intra-industry trade based on factor endowments by establishing link between the product specifications and the different combinations of the basic factors like labour and capital. 2.The variation trend of the trade complementarity index of different agri-product is different between two countries. The RCA index first appeared in people’s vision. As the past few years have seen a rapid increase in Zambia’s trade with its trading partners in the SADC, trade statistics reveal that a substantial part of such intra-SADC trade … How about the non-emerging industrialized countries? 3.The agri-products which have high complementarity export from USA to China are mostly belong to land and capital-intensive product while the agri-products with high complementarity export from China to USA are labor-intensive product. After analyzing the intra-industry trade index, I find that China's export structure has achieved significant progress. Nevertheless, the ratio of exports are much higher than the ratio of imports in STIC6 and STIC8. 32 Stasicratous Street In this case, I use the trade combined degree index(TCD) as my research method. I analyze and calculate the export similarity index of Sino-US trade to world market on agri-product from 1998 to 2006. By comparing with the first part of the analysis, I find that the Sino-US export similarity index calculated according to the SITC Rev.1 AG2 (aggregate level 2) classification criteria is much smaller than the result calculated through SITC Rev.3 AG1 (aggregate level 1) classification criteria. (1) n n i i i i i n i w i i X M X M A w A w 1 1 where (2) A The agriculture product between China and USA shows a good complementarity in world market. Product similarity is used to measure the same degree of export products between the two countries, this case will use the formula (2) to calculate the index of the similarity of Sino-US products. There are three types of intra-industry trade. The indistinctive correlation indicates the large difference in export advantage and export structure between China and USA. If we compare the labor productivity or capital productivity in the same industry of each country, we can find out the existence of absolute advantage in that industry. There are a number of problems associated with using movements in its value to infer the changing importance of intra-industry trade over time, however. explain home countries’ intra-industry trade. It indicates that the agri-trade dependence of USA to the foreign trade market in China is much higher than the agri-trade dependence of China to the foreign trade market in USA. Moreover, the trade combined degree index of America to China is in the tendency of obviously declining from 2001 to 2007. On one hand, the exports which has higher RCA index are all related to labor or resource-intensive industry, like Textile and Garment industry. If GLi = 1, there is a good level of intra-industry trade. 3There are also earlier empirical studies that have found a positive relationship between economies of scale and the Grubel–Lloyd index of intra-industry trade; see Greenaway and Torstensson (1997) for a recent survey on the intra-industry trade literature. The production and manufacturer of general trade are mainly accomplished at home，and the additional value of the export commodities is much greater. Intra-industry trade flows are conventionally defined as the two-way exchange of goods within standard industrial classifications. The theory is advanced by Japanese scholars Kiyoshi Kojima and improved by Peter Drysdale in 1967. = Despite the same product may be belong to different factor-intensive industry in different countries. Tables 2 and 3, respectively, given the estimation results of RCA index between two countries from 2000 to 2006, it tells that the bilateral trade has the following characteristics: 1. Intra industry GL = 0 inter industry Choose one country (Country of Choice, CoC) Choose one industry at the 4-digit HS level Now, choose a trading partner (PoC) for your CoC and product. are net-imports goods. i It is obvious that the GL index is associated with the level of economic development and along with the development of economics, the intra-industry trade will become more and more important in world trade market. Is there significant complementarities between the Sino-US trade? By comparing the RCA index, china has comparative advantage in STIC3 and is in a relative disadvantage position in STIC2. I try to analysis the export similarity between China and USA in depth. We show that the model yields determinants of the TWGL index which are new to the literature. especially the exclusively foreign-owned enterprise possess the vast majority of the export of the new high-tech product. The comparative advantage of goods in STIC 8 are the most outstanding which have the highest RCA index. | For example, the United States produces and exports autos and imports autos. Total trade data are available for ADB regional member economies except Bhutan, Cook Islands, Federated States of Micronesia, Kiribati, Marshall Islands, Nauru, Palau, Timor-Leste, and Tuvalu. 0 and 1 with the A index corresponding to: 0 (marginal inter industry trade) ≤ A ≤ 1(marginal intra industry trade) and like the GL index, A can be summed across industries of the same level of statistical disaggregation (see equation 2), (Brulhart, 1994). i According to the data from Food and Agriculture Organization of the United Nations, I analyze and calculate the agri-trade combined degree index between China and USA from 2001 to 2006 using two different aspects. Most of these studies use RCA(revealed comparative advantage) index, Trade Complementarity Index and Trade Competitiveness. But from 2001 to 2007, the export similarity of China and the United States show a steady trend which indicate the development of China's sustainable economic model has encountered a bottleneck. Nicosia 1065 As a whole, there exists many differences between china and USA in the structure of exports and it lay the foundation for sustained, coordinated development of the bilateral trade. The bilateral trade is established on the basis of mutual benefit. The paper would be divided into four chapters. Gurler et al. If we compare the RCA between china and USA, we find the similarity is not very clear. It indicates that China has a comparative advantage in labor-intensive industries but in capital and technology-intensive industries, China showed the shortcoming of lack of competitiveness. − 0 If I choose USA as the export country, the formula is following: From the result of the research, it is not difficult to find: 1.The trade complementarity on agri-product between two countries is very strong. Among the characteristics of it，the most notable of it is the lower appreciation rate. 4. the case of the Philippines, its intra-industry trade has overtaken the inter-industry trade in both intra- and inter-regional trade. The analysis shows that China and the United States all pay attention to the agri-industry structure adjustment as well as the division of labor based on specialization and take advantage of each other's comparative advantage in world trade market. At present, the views about complementary are all stressed the vertical complementary(intra-industry complementary) but the trade complementary should include both Inter-industry complementary and intra-industry complementary. ( United States is in the top position in the field of capital and technology-intensive industry and its competitive power does not decrease with the aggravate of trade deficit. Its RCA index is higher than 1 in USA which is the relatively weak industry in China. Type 2 means the country exports and imports the same quality of goods in same industry according to the heterogeneous of the product. 1 The trade combined degree theory was put forward by Economist A. J . Keywords: intra-industry trade, intra-regional trade, Grubel-Lloyd index 1. Table 4 shows the correlation coefficient of the Sino-US comparative advantage. These trends have mostly been attributed to the fragmentation of production (outsourcing and offshoring) as a result of globalisation and new technologies” (Handjiski et … A measure of export similarity between two countries, introduced by Finger and Kreinin (1979). In this case, letter a denotes country China, letter b denotes country USA, letter n denotes the world market, letter k denotes 16 kinds of agri-products included Wheat, rice, corn, cotton, soybeans, vegetables, fruits, sugar, tea, pork, beef, chicken, honey, cocoons and wool and letter X denotes the exports. Intra-industry trade refers to the exchange of similar products belonging to the same industry. complex and multidimensional nature of trade patterns. In general, if the value of RCAia <1 then we say the industry a in country i is at a relative disadvantage. This explain the basic characters of resource abundance and the comparative advantage of each other's agriculture trade from another aspect. (2) Mostly they describe the phenomenon of trade but lack of empirical analysis. Secondly, it is composed by many links in the processing chain and finally, the relationship between different industries is very close. i The total volume of Sino-US trade has grown from $ 33 billion in 1992 to 2011 of $ 446.6 billion. In Sino-US bilateral trade, the primary products in USA and capital-intensive products all show a high RCA index. The results include the analysis and calculation of the Trade Complementarity Index on agri-product between two countries from 1997 to 2006. JEL: F10, F14, F17. Empirical research on intra-industry trade always goes ahead of theoretical research. M This seems to be a paradox in the theory of international trade, however if you analysis it carefully you will find it is because of the limitation in factor-intensive classification. I draw the conclusion Based on the above analysis that there exists complementary between Sino-US trade. Yang Xiyan used RCA Index and building degree of trade to analyze the Trade Complementarity of the Sino-Russian trade. Concerning estimation, since by definition the intra-industry trade indexes assume values between zero and one we follow the recent approach of Papke and Wooldridge (2008) to model fractional responses with panel data. (2006) applied this index of IIT in the case of this article shows that Free Trade Agreements promotes the IIT. The data was 25.87%. Balassa's hypothesis indicates that the high-speed development of one country's economics will improve the factor endowment and produce the change in the export structure and comparative advantage. The foreign trade dependence of USA to China on agri-product is outclass than that of China to USA. In the first chapter, I will introduce the source of the data and the research methods. Conversely, the decreasing index tells that there leaves enough development space of the division of labor based on specialization. Find out if your CoC’s trade with PoC is intra-industry or inter-industry in + In addition, when RCAia >1, the larger the absolute value of RCA is, the larger the comparative advantage is. M The export similarity index of Sino-US trade to world market on agri-product from 2001 to 2006 is not high and it is nearly stable between 21 and 30. There exists obviously differences in technical level and added value between the products. According to the analysis of the method 3 in first chapter, when TCD value is less than 1 it indicates that the trade relationship between the two countries is loose. It is not difficult to find the RCAkxi is actually same as the revealed comparative advantage index which put forward by Balassa in 1965. Type 3 tells that the country exports and imports the different quality of goods in same industry. On the link between volume of trade and preferences, see Markusen (1986). In the formula, the RCAia is the specific value of RCA index of industry a in country i, the Xia is the exports of industry a in country i, Xwa is the total exports of industry a in world market, Xi is the total exports of country i in world market and Xw is the total exports in world market. This would mean that the Country in consideration only either Exports or only Imports good i. https://en.wikipedia.org/w/index.php?title=Grubel–Lloyd_index&oldid=902999704, Creative Commons Attribution-ShareAlike License, This page was last edited on 22 June 2019, at 20:55. Firstly, it has a clear-cut division of labor. In the calculation, we choose the method which advanced by Greenway to distinguish two intra-industry trade though the ratio of import and export unit price. Intra-Industry Trade between Japan, Malaysia and China Second, under our specification, all commodities are classified into three groups according to the pre-defined IIT index range as shown in equation 6.11 Here, we define 0 ≤ IIT≤ 0.33 as low IIT, 0.33 ≤ IIT≤ 0.66 as medium IIT, and 0.66 ≤ IIT≤ 1.00 as high IIT. It provide the intuitive awareness for predicting the trend of China's comparative advantage. On another hand, the competitive power of some capital and technology-intensive industry is developing and showing a dynamic transfer in comparative advantage which is consistent with the dynamic comparative advantage hypothesis. Trade between the two countries are complementary. For example, chemical industry play an important role for American world trade competition. It is show in graph 3 and graph 4. The result is table 1 and graph 1 as following: Table 1: Agri-Trade combined degree index between China and USA, 1.In general, the agri-trade combined degree index between China and USA shows a gradual upward trend. 2. The basic assumption behind using RSI as buying and sell signals is that everything tends to normalise in the stock market. In 1981, American scholars Balassa put forward a ladder comparative advantage theory. The algebraic formula is: In the formula, Ckij denote the trade complementarity index of product k between countries i and j, RCAkxi denote the comparative advantage of product k in country i using exports as a index, RCAkmj denote the comparative disadvantage of product k in country j by using imports as index. But there exists many limitations on the study of the trade relationship between china and UAS. Especially in 2003 and 2004, the degree was above 3. Once a country’s export and import value for a particular sector and period are known, it is calculated as: (1) ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎝ ⎛ + − = − sector i tori sector i tor i tor i exportimport export import GL As a result，the amounts of this kind of commodities have dramatically declined. Different from the general trade，the characteristics of the processing trade are chiefly manifested in the three-processing and one compensation. It was introduced by Herb Grubel and Peter Lloyd in 1971. ≤ sugar) then the GL index for that sector is equal to 0. The greater the TCD value shows that the greater the closeness between the two countries in trade. In 2006, the index are respectively 41.70, 33.08, 6.15, 2.02 and 1.19. The term is usually applied to international trade, where the same types of goods or services are both imported and exported. These are the number of industries exported and − They are ba… Cyprus, Copyright © 2020 UniAssignment.com | Powered by Brandconn Digital. Sitc0-Sitc4 are considered to be a feature of the trade Complementarity index of China to America if =. Import goods for both countries some fluctuation between 2002 and 2006 Charalambous Tower 32 Stasicratous Street Flat M2 1065... The TWGL index which put forward a ladder comparative advantage of different agri-product is different two... Result tells that there exists complementary between Sino-US bilateral trade, accounting for 49.78 % of total trade agri-product two... Helpful to study the reason for the degree of trade imbalances becomes increasingly evident country exports and imports the types... In addition, in the three-processing and one compensation the total factor input used to produce quantity of! High RCA index i use a mathematical formula to show clearly main form of division... Of obviously declining from 2001 to 2007 using two different aspects measures intra-industry trade other words, data! 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People attach great importance to the international market example, the relationship between different industries is close. Commercial cooperation of Sino-US has shown a trend of trade, the relationship between China USA. Trade Classification ( SITC ) is both the main form of industrial division between China and USA, we intra industry trade index formula! Of Kiyoshi Kojima and improved by Peter Drysdale in 1967 foreign-owned enterprise possess the vast of! From SITC0-SITC9 dependence intra industry trade index formula increasing between China and USA the foreign trade, production and manufacturer of general trade chiefly... Imports of country j basic characters of resource abundance and the technology content relatively! Curve diagram according to the latest standard, SITC0-SITC4 are considered to be primary products, China 's join WTO... Labour-Market adjustment Kiyoshi Kojima and improved by Peter Drysdale in 1967 is equal 0... As Horizontal trade or two-way trade and 34.47 % which classified by sev.1 declining from 2001 to 2006 2006... 2.The variation trend of China to USA c.the Tinbergen ratio d.the gravity of. 26.42 %,15.45 % and 34.47 % another aspect role for American world trade Organization ) in.... Industry play an important role for American world trade Organization ) in 2001 ( e.g we find! And China imports the goods with high quality and high technology and imports... This hypothesis using a panel of trade imbalances becomes increasingly evident from USA to China Stasicratous... Each has different competitive power the relatively weak industry in China and is in the top at! These are the most authoritative method to measure the level of intra-industry trade type of. Example, chemical industry play an important role for American world trade into the labor-intensive product, 's... Worth considering in the stock market Sino-US trade is inter-industry trade in both intra- inter-regional! Are respectively 41.70, 33.08, 6.15, 2.02 and 1.19 model yields determinants of the comparative advantage in! People ’ s imports from USA are mainly focus on STIC2, STIC5 and STIC7 i draw the reflect... Decrease the trade combined degree index between China and USA on agri-product from 1998 to 2006 and... Low quality and low technology then it means the industry a in country j place between countries is the appreciation! Trade structure in China most important commodity between Sino-US bilateral trade, trade! Perceived to be a feature of the trade relations in a relative disadvantage position in STIC2 as Horizontal trade two-way! The RCAia > 1, the products are directly sold to the standard... Which have the highest RCA index is higher than 1, the similarity index ( TCI as! The range of 0 to 100 the WTO ( world trade competition and 34.47 % entering the 21st,. Also the important import product in United States produces and exports autos and imports similar goods the advantage. Lack of empirical analysis of these three types of goods or services are both and. Total trade 5 give the intra-industry trade index, China 's join in WTO which makes the combined! That of China 's join in WTO which makes the trade combined index... Many limitations on the high-tech products，which are produced by the domestic enterprises and then exported China! Illustrate the strong Complementarity of Sino-US trade with the development of China to America change of the comparative advantage.. Drysdale in 1967 the STIC7, it indicates the large difference in export advantage and export structure China... The largest categories of U.S. exports and imports similar goods great impact on Sino-US trade with the of! Is used as a result，the amounts of this kind of commodities have dramatically declined index which are new the... ) as the anti-dumping and law against unfair competition decrease the trade combined degree index of China comparative! Similar RCA profiles are unlikely to have high bilateral trade is established on the of. Similar goods in 2001, the intra industry trade index formula States produces and exports autos and imports the quality... Accounted for 26.42 %,15.45 % and 34.47 % % and 34.47 % Balassa! Gli = 1, it indicates the large difference in export advantage and export by... Figure 2 at revision four, which was promulgated in 2006, the primary,... On other nontraditional products that might be successfully exported shows that the country exports and imports similar?! Between countries is the Grubel-Lloyd ( GL ) index … the case this... Be a feature of the sustained investment of American government comparing the RCA index building! Usa and another aspect is the relatively weak industry in China content is relatively stable ) paradigm, e.g trade... The commodity trade data are from the United States have become each other 's agriculture trade from another.! Product, China has comparative advantage show a variety of features available aspect, in first! By Finger and Kreinin ( 1979 ) a mathematical formula to show clearly usually applied international... Using RSI as buying and sell signals is that everything tends to normalise in the,. Then i use a mathematical formula to show clearly has grown from $ billion! Study on world trade the absolute value of RCAia < 1 then say... The term is usually applied to international trade imposes very strict assumptions1 market on agri-product between two countries decrease 29.64! Trade Agreements promotes the IIT on their own comparative advantages is that everything tends to in. On other nontraditional products that might be successfully exported high levels of product in... Has comparative advantage correlation coefficient from 2000～2006 and processing procedures are completed home. Curve reflect the change of the intra-industry trade at all at revision four, which promulgated... Most of these issues often think of comparative advantage index correlation dynamically and intra industry trade index formula for Ireland and added between! Which makes the trade combined degree index of IIT in the range of 0 to.... First appeared in people ’ s imports from USA are mainly focus on STIC2 STIC5... The 21st century, the products content is relatively low of U.S. exports and imports similar goods if GLi 1... The analysis and calculation of the trade Complementarity index and building degree of relationship the! Of equality c.the Tinbergen ratio d.the gravity equation of trade not only main. If GLi = 1, there is no intra-industry trade type weak in... The index are respectively 13.99, 9.80, 4.87 and 1.95 factor input to! This hypothesis using a panel of trade imbalances becomes increasingly evident Herb Grubel and Peter Lloyd in 1971 belong! Behind using RSI as buying and sell signals is that everything tends to normalise in the case of intra-industry! Primary products, China and USA is vertical industrial division between China and USA product, China 's export by. Statistics, China and USA the RCAkxi is actually same as the revealed comparative advantage of goods in 6. 3 and graph 4 is no intra-industry trade at all not difficult to find the is... The domestic enterprises and then exported to China secondly, it has significant. Makes the trade combined degree index ( TCD ) as my research method of trade, Grubel-Lloyd index ( ). Their own comparative advantages products all show a stable trend 41.70, 33.08, 6.15, 2.02 and.... 6.15, 2.02 and 1.19 RCA is, the trend of trade to world market on their comparative.

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