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Intra Industry Analysis

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As the most open economy in the world, in 2016 total trade value of Singapore accounts for about 1.95% of the total world trade (World Economic Forum, 2016). In 2016, Singapore is the world’s 14th largest exporter with export value of 315 billion USD and the 17th largest importer with import value of 259 billion USD, it has trade surplus of 55.4 billion USD. Besides, according to the Economic Complexity Index (ECI), which measures the diversity and complexity of the export products of a country, Singapore was ranked at the 4th position (The Observatory of Economic Complexity, *; Atlas,*). The top trade partners of Singapore are China, Hong Kong, Malaysia, the United States, Japan and Indonesia (World Integrated Trade Solution, *). Looking at …show more content…

On the consumer side, intra-industry trade can enlarge the consumer’s wealth fare. This kind of trade enhances the choice of the consumer since it increases the product’s variety. Moreover, the bigger size of the market due to trade lowers the price of the product; therefore, the consumer can buy the product at cheaper price comparing to zero-trade market. For the economy, intra-industry trade can boost the efficiency of the economy. When the trade is opened, competition among firms of an economy also escalates. Since efficiency varies across firms, to survive and keep produce, firms have to increase their productivity and the less efficient firms have to leave the market. Consequently, the overall efficiency of the whole industry will …show more content…

In 2014, Singapore was the largest oil supplier of Vietnam, accounting for about 30% total value of oil product imported by Vietnam; while most of agricultural products of Vietnam, including rice, coffee and seafood exported to Singapore (Toan, 2015; Vietnam Plus, 2015). According to the Hecksher-Olin theorem, the country that is abundant in a factor, exports the good, whose production is intensive in that factor. Because Singapore is a small country with small number of population, but it has large amount of capital and advance technology, Singapore has comparative advantage at capital over Vietnam. Therefore, in trade with Vietnam, Singapore exports the capital-intensive and high-technology goods, such as refined petroleum to Vietnam. Vietnam, on the other hand, has comparative advantage at agricultural products, so it mainly exports its agricultural goods, such as rice and coffee, to

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