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Over recent years, international trade flows of automotive products have experienced rising trends. Thus, the need to gain a better understanding of trade theories that could explain such trade flows. Until recently, the theoretical and empirical distinction of intra-industry trade (IIT) into patterns of horizontally differentiated (by variety) intra-industry trade (HIIT) and vertically differentiated (by quality) intra-industry trade (VIIT) has become crucial because each IIT pattern may potentially be influenced in different manners by country and industry factors (Greenaway, Hine&Milner, 1995). The objective of this thesis is twofold. Firstly, to measure the empirical significance of IIT in the automobile industry between South Africa and its bilateral trading partners and to decompose total IIT (TIIT) into VIIT and HIIT patterns. Secondly, to develop empirical models to investigate potential country- and industry-specific determinants of IIT patterns in the South African automobile industry. The empirical strategy adopted in this thesis is a gravity model spanning the period 2000 to 2007. The automobile industry is a principal industrial sector in the South African economy contributing notably to trade, investment, employment and national output. The structure and conduct of the industry is aligned with several elements of IIT theories and thus represents an important and fascinating case of IIT patterns to investigate. Therefore, the findings of this thesis will be valuable to trade policy analysts and manufacturers in the local and global automotive industries. According to the objectives, the significance of IIT is estimated using the trade overlap index and the empirical separation of total intra-industry trade (TIIT) into VIIT and HIIT is conducted using the threshold method. The empirical results reveal the presence of significant levels of IIT in automotive trade flows between South Africa and its bilateral trading partners. In accordance with theoretical expectations, the empirical investigation signifies the existence of high shares of VIIT dominating TIIT in the South African automobile industry. Moreover, the empirical analysis postulates that, within VIIT, the domestic automobile industry potentially produces and exports high quality automotive products proposing that such VIIT can be partly explained by fragmentation and international production processes. Next, gravity models are estimated to investigate the determinants of IIT patterns in the automobile industry. The econometric results of the gravity models of VIIT, HIIT and TIIT are statistically and economically significant in the context of the fixed effects method of estimation and in accordance with new trade theories. The empirical results reveal that relative difference in economic size, trade openness, foreign direct investment (FDI) and tariffs stimulates VIIT, whilst distance, economies of scale and automotive assistance negatively affect it. Conversely, relative difference in economic size, FDI and automotive assistance negatively affects HIIT, whereas trade openness and depreciation of the exchange rate positively influences it. Thus, the findings of the thesis assert that IIT patterns of VIIT and HIIT in the automobile industry are influenced differently by country and industry determinants, revealing that the theoretical and empirical distinction of TIIT is important. The thesis proposes advancing trade liberalisation and deregulation of the South African automobile industry that could attract greater efficiency-seeking FDI complementary to trade and as a consequence enhance IIT levels. / Thesis (PhD)--University of Pretoria, 2011. / Economics / unrestricted

Submitted by Mariana Dornelles Vargas (marianadv) on 2015-03-19T15:00:32Z No. of bitstreams: 1 estimativas_volume.pdf: 602839 bytes, checksum: f10648288eb6067186326c409eb15d41 (MD5) / Made available in DSpace on 2015-03-19T15:00:32Z (GMT). No. of bitstreams: 1 estimativas_volume.pdf: 602839 bytes, checksum: f10648288eb6067186326c409eb15d41 (MD5) Previous issue date: 2010-09-24 / Nenhuma / O propósito central deste trabalho é estimar os fluxos de comércio internacional bilateral entre os países BRICs - Brasil, Rússia, Índia e China - em períodos futuros. Para estas estimações, são consideradas as previsões realizadas pela consultoria econômica Goldman Sachs (2001) que, além de detalhar valores estimados para o PIB e a renda per capita dos BRICs até o ano de 2050, apontam que estes quatro países estarão entre as seis maiores economias do planeta em torno de 2040. O estudo utiliza um modelo gravitacional baseado numa amostra de 57 países para o período 2000 - 2007, a fim de obter-se uma equação normal para explicar o comércio internacional no mundo atual. A aplicação de dois métodos de estimação - MQO e Tobit - gerou uma coleção de possíveis coeficientes, que foram testados técnica e qualitativamente, para escolher-se as duas equações mais adequadas para as previsões dos fluxos bilaterais de comércio dos BRICs. Finalmente, os coeficientes destas equações foram arranjados para, combinados a dados reais e às estimações de PIB e renda per capita futuros construídos pela Goldman Sachs, prever intervalos de confiança para o tamanho dos fluxos bilaterais de importação entre os BRICs num cenário de curto (2010), médio (2020) e longo prazo (2030). O modelo gravitacional aqui usado é um instrumento de forecasting, validando esta fronteira de utilização para a equação gravitacional de comércio. Seus resultados mostram que o volume de comércio 'intra-BRICs' crescerá mais intensamente do que o próprio PIB destes países, podendo se multiplicar 10 vezes entre 2010 e 2020, e 50 vezes entre 2010 e 2030, gerando uma maior interdependência que poderá estimular as relações articuladas entre estas economias para garantir a sustentabilidade de seu crescimento econômico. / The main purpose of this research is to estimate international trade flows for all the existent bilateral relations between the BRICs – Brazil, Russia, India and China – in the future time. This process starts by considering the estimations made by the investment bank Goldman Sachs (2001), which released a study that not only estimated amounts for the GDP and GDP per capita for the BRICs until the year 2050, but also revealed that these countries will position themselves, no exception, between the six biggest economies of the world by around the year 2040. This study adopts a gravity model based on a sample of 57 countries. Trade flows and a variety of other data were collected from 2000 to 2007 to enable the estimation of gravity equations that explain the international trade in the world in current days. By using two different estimation methods – OLS and Tobit – a wide set of possible parameters was generated, which were all tested on a technical and on a qualitative basis, with the aim to choose the two most adequate equations for the estimations wanted. Finally, these two best parameter sets were arranged and applied on gravity equations, combined with the Goldman Sachs predictions, in order to obtain future estimations of bilateral trade flows between them in three time-scenarios: short term (2010), midterm (2020) and long term (2030). In this way, the gravity model is here a pure forecasting model, validating this bound of utilization for the instrument. The results are showing that the ‘intra-BRICs’ trade flows will grow even more intense than the GDP of these countries itself, meaning an unprecedented internationalization process featured by the construction of a web of high interdependence between these economies. Trade between the BRICs could rise 10 times within 2010 and 2020, and 50 times within 2010 and 2050. International trade among the BRICs will definitely be necessary for them to sustain economic growth.