Determinants of South Africa-US intra-industry trade in services : a wild bootstrap dynamic panel data analysis

Abstract

The study attempts to empirically identify factors that determine South Africa–US intra-industry trade (IIT) in selected services during the period 1994-2002. The study utilises Liu-Davidson-Flachaire wild bootstrap, which is robust to heteroscedasticity and provides estimates of the degree of parameter bias. The empirical results, in principle, show that South Africa–US IIT in the selected services is determined by factors similar to goods-based "North-South" IIT studies. Specifically, differences in per capita income and differences in market size negatively affect IIT. The study also indicates that US foreign direct investment in South Africa positively contributes to the unaffiliated IIT in services.