I calculate the Grubel-Lloyd inter-industry trade index between the two countries for the period between 1990 to 2009. I find that China-Japan experienced considerable increase in intra-industry trade. I can assume that intra-industry trade is in larg...
I calculate the Grubel-Lloyd inter-industry trade index between the two countries for the period between 1990 to 2009. I find that China-Japan experienced considerable increase in intra-industry trade. I can assume that intra-industry trade is in large part caused by fragmentation of production between China and Japan. Given that a trade -investment nexus exists to explain intra-industry trade in China -Japan trade, intra-industry trade in the two countries can increase further as the China receive more foreign direct investment from Japan.