Intra-industry trade in the manufacturing sector of South Africa

Abstract

Previous studies have attempted to examine the level of South Africa's intra-industry trade. Given the serious limitations of the various indices like the Grubel-Lloyd index that were used in prior studies, this study uses regression analysis to determine the significance of intra-industry trade in South Africa's manufacturing trade. South Africa's manufacturing trade is reasonably explained by the world share and similarity of South Africa and its trading partner countries. Since the Helpman theorem is based mainly on trade with differentiated products and since intra-industry trade refers to trade in these product varieties, the responsiveness of South Africa's bilateral manufacturing trade to these variables is sound evidence that intra-industry trade constitutes a significant proportion of South Africa's manufacturing trade with the rest of the world.