Pattern of Intra-Industry Agricultural Trade between China, Japan and Korea - Using Revised G-L Indices

Grubel-Lloyd’s measure of intra-industry trade (IIT) is widely adopted since it is proposed. But as Bergstrand (1983) points out, IIT should be measured on multilateral basis instead of bilateral basis and it is better to be calculated using the trade imbalance adjusted data. This paper proposes a revised way of measuring bilateral IIT and try to employ it to explore the agricultural trade pattern between China, Japan and Korea. Comparing with the former research, novel features of this paper lie in three: First, calculate IIT level based on bilateral basis, using trade partner’s export to the declaring country to represent the declaring country’s import from this partner. Thus, both the import and export can be measured by FOB price by which the more accurate IIT can be achieved. Second, two thresholds (IIT=0.5 and min(Xij, Xji)/max(Xij, Xji)=0.1) to be adopted to disentangle IIT from INT instead of just using the second which firstly proposed by Abd-el-Rahman, K. (1991). Third, In order to measure the IIT under the condition of trade balance, this paper uses a multiple N (N= (ΣXij)/(ΣXji), details seen in body of this paper) to adjust the greater export value to the same scale as the less one. Then calculate the adjusted IIT based on the same scale of bilateral trade.