The nature and extent of intra-industry trade in South Africa

Abstract

Intra-industry trade occurs when goods from the same industry category are both exported and imported. Types of intra-industry trade are identified, and theoretical models of intraindustry trade under conditions of imperfect competition are examined. The results of thirtyseven empirical studies on the determinants of intra-industry trade are analysed. Methods of measuring intra-industry trade and marginal intra-industry trade are discussed, and various measurement problems are dealt with. The extent of intra-industry trade in South Africa in 1992 and 1997 is measured, using the Grubel-Lloyd and Michaely indices. The BrUlhart indices are applied to measure marginal intra-industry trade. South Africa has a relatively low and stable level of intra-industry trade in manufactured goods: the GrubelLloyd index for 1997 is calculated to be 37 per cent.