Havrila, Inka and Gunawardana, Pemasiri (2006) Australia's bilateral intra-industry trade in textiles and clothing. Working Paper. Victoria University, Melbourne, Australia.

Abstract

Australia’s share of intra-industry trade (IIT) in its total trade of textiles and clothing (TAC) is one of the lowest among the OECD countries. However, over the recent years there has been a rising trend in Australia’s IIT in some categories of TAC products. The purpose of this paper is to analyse the extent and determinants of Australia’s bilateral IIT in TAC. The Grubel-Lloyd index is used to measure the extent of IIT, and econometric models are developed and estimated using the Tobit model estimation procedure to analyse the determinants of Australia’s bilateral IIT in TAC with eleven of Australia’s major trade partner countries. The findings from the estimated model for textiles indicate that, as expected, the extent of Australia’s bilateral IIT in textiles increases with expanding average market size, average per capita income, and openness, and greater participation in trading agreements between Australia and trading partners. However, as expected, the extent of Australia’s bilateral IIT in textiles decreases with increasing differences in average market size, average per capita income and the distance between Australia and trading partners. Contrary to expectations, increases in average capital to labour ratio seems to reduce the extent of Australia’s bilateral IIT in textiles. The results from the estimated model for clothing reveal that, as expected, the extent of Australia’s bilateral IIT in clothing increases with increasing average per capita income and greater participation in trading agreements, while it decreases with increasing difference in average per capita income between Australia and trading partners. However, in contrast to expectations, Australia’s bilateral IIT in clothing decreases with increasing average market size, while it increases with increasing difference in average market size, between Australia and trading partners.

Search Google Scholar

Repository staff login