(DP 1994-02) Intra-Industry: The Philippines in AFTA

Florian A. Alburo


The early emphases of ASEAN economic cooperation on country specialization, upstream industries based on resource endowments, and industrial complimentation were misplaced. Much of global trade expansion has been intra-industry trade fueled by multilateral trade liberalization and common market formation, as in Europe. The traditional doctrines of Hecksher-Ohilin-Samuelson has less to do with trade in industrial products. And since ASEAN economic cooperation, and now AFTA, has always concentrated on manufactures, including processed agriculture, then an intra-industry trade framework seems more suited to its analysis and understanding. The paper shows substantial intra-industry trade of the Philippine with ASEAN among the 15 product groups indentified for accelerated liberalization, even in 1991, two years before the start of AFTA. This augurs well for larger prospects. The paper argues for specific ways and broad policy directions to capture more gains from AFTA.

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