How Does Industrialization Affect the Structure of International Trade? the Japanese Experience in the Pacific Basin, 1975-85
Author: Sayuri Shirai1
  • 1 https://isni.org/isni/0000000404811396, International Monetary Fund
This paper provides a theoretical model to address the issue of how industrialization affects the structure of international trade. Considering both horizontal and vertical product differentiation, the model shows that intra-industry trade increases when product quality improvement emerges in a developing country and when a difference in relative factor endowments between a developed and a developing countries shrinks. To promote understanding of the conclusions of the model, the paper also uses actual trade data between Japan and Indonesia and between Japan and Korea.
IMF Working Papers

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