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Trade and Evolution

In: Business and Management

Submitted By oonkokkem
Words 2218
Pages 9
Trade and the Evolution of Product Quality in AFTA

Illustrative paper For
GSM 5123 STUDENT

I Introduction

With the formation of AFTA, the role of trade within and between ASEAN member countries has become increasingly important. Central to the discussion has been the role of intra-industry trade (IIT), defined as the simultaneous import and export of goods from the same industry. Past studies on the performance of Malaysian bilateral or multilateral IIT flows has been general in the sense that these studies has been conducted by covering all Malaysian based manufacturing industries. Our interests here in presenting a close examination of intra-industry trade in the Malaysian natural resource intensive industries (NR) are two fold; firstly is our untested conviction that these NR industries represents genuine Malaysian IIT in comparison to the Malaysian based technology intensive industries which are wholly foreign owned.

Another reason given for this apparent lack of attention is a tendency to concern ourselves with the high growth TI industries. It is feared that increased competition from other ASEAN countries could prove detrimental to the domestic producers in these industries. The concentration on manufactures is also defended because a large proportion of all imports and exports is made up of manufactured products. In 1994 total exports of manufactures were RM 112.2 RM (billion) while imports totaled 124.9 RM (billion). This compares with non-manufactures trade of only 40.5 RM (billion) and 24.9 RM (billion) for exports and imports respectively. For total trade in Malaysia in 1994, approximately 26% of exports were from natural resource intensive industries and 16% of imports. This compares with 73% and 80% for exports and imports of manufactures.

As you would expect the equivalent intra-industry trade values show that over 87% of total IIT is...

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