Article
Does the Quality of Political Institutions Affect Intra-industry Trade within Trade Blocs? The ASEAN Perspective
Applied Economics
(2018)
Abstract
There has been a renewed resolve for deeper integration and cooperation within ASEAN. Intra-industry trade (IIT) is often viewed as a way of achieving economic as well as political integration. Thisarticle tests for the effect that political regime and governance may have on the intensity of IIT. We particularly examine if quality of political institutions which includes corruption and democracy indices as well as economic factors comprising corporate tax rate, regional FDI flow, flexibility of exchange rate regime, size of the market, economic distance affects the intensity of horizontal and vertical IIT. The study finds that control of corruption and good governance both increase the vertical IIT but not the horizontal IIT. The study further finds that intra-economy FDI flow, stable exchange rate regime, market size and proximity positively affect IIT within the trade bloc. However, the negative effect of corporate tax rate suggests that if countries were to coordinate their tax policies, they could avoid harmful tax competition and promote IIT across their borders. The findings regarding the effect those economic and political factors have on the intensity of IIT certainly warrants the attention of policy makers and researchers alike.
This paper can be downloaded at:
http://www.tandfonline.com/eprint/FR52CyagdbKagIjRs78S/fullÂ
Keywords
- Intra-industry trade (IIT),
- quality of political institutions,
- ASEAN
Disciplines
Publication Date
Winter 2018
DOI
10.1080/00036846.2018.1430336
Citation Information
Nusrate Aziz, B Hossain and I. Mowlah. "Does the Quality of Political Institutions Affect Intra-industry Trade within Trade Blocs? The ASEAN Perspective" Applied Economics (2018) Available at: http://works.bepress.com/nusrate_aziz/30/