COMPARATIVE ADVANTAGE IN TRADE STRUCTURE AND PRODUCT LIFE CYCLE IN CHINA AND GREATER MEKONG SUB-REGIONS

Ling, Fung Mee (2019) COMPARATIVE ADVANTAGE IN TRADE STRUCTURE AND PRODUCT LIFE CYCLE IN CHINA AND GREATER MEKONG SUB-REGIONS. [Final Year Project Report] (Unpublished)

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Abstract

This study aims to examine the robustness of the flying-geese (FG) and product life cycle (PLC) model in modeling the trade structure of industrial transition in Greater Mekong Sub-regions in relation to the rapid economic development of China. For this purpose, the study adopt the revealed comparative advantage (RCA) index measurement and convergence theory to reflect the life cycle of a particular indust~al commodity among the selected Greater Mekong sub-regions-Vietnam, Cambodia, Laos and Myanmar (VCLM). From our empirical findings, for the manufactured commodity, we witness that the industrial transition among the four selected countries is highly compatible with the FG model. The empirical finding of convergence also reveal the shifting of the industrial transition to the selected four countries in the future compatible with FG and PLC with the development of China. However, from a wider perspective of manufacturing activities, four countries show the FG patterns of industrial transition among them. In the case of China, the RCA index is relatively inconsistent. In most production of commodities, China is more responsive to the changing RCA index trend in the four selected countries. This implies that the rapid , development of China especially in relation to the surge inflow of foreign direct investment (FDI) especially, since its accession to the World Trade Organization (WTO) is affecting the robustness of FG in modeling the future pattern of industrial transition in Greater Mekong sub-regions.

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