Intermediate Products and the Regionalization of Trade

Abstract

Purpose – This paper aims to exploit a new trade database to explore the extent to which trade, and the industrial division of labor which it represents, is regional in nature.

Design/methodology/approach – The analysis focuses especially on intermediates trade, in three key regions – the EU, NAFTA and ASEAN 3 – which together represent 78 percent of global trade.

Findings – The results indicate that levels of regional integration in trade and changes in that integration vary by region and by direction of flow. Notably, the EU has higher levels of intra-regional trade than the other two. These results vary by technology, with high-tech trade less regionally biased than others.

Originality/value – Trade data has been little used in the debate on the regionalization of business activity. In addition, the paper highlights trends, not just in total trade, but within intermediate products and by technology.

Keywords: Economic integration, Globalization, International trade, Regional development, Trade barriers

JEL Classification: F10