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Sayuri Shirai
This paper provides a theoretical model to address the issue of how industrialization affects the structure of international trade. Considering both horizontal and vertical product differentiation, the model shows that intra-industry trade increases when product quality improvement emerges in a developing country and when a difference in relative factor endowments between a developed and a developing countries shrinks. To promote understanding of the conclusions of the model, the paper also uses actual trade data between Japan and Indonesia and between Japan and Korea.
Ms. Ratna Sahay
Widespread shortages in key inputs are common in mixed economies of developing countries. These shortages appear to occur at the same time that relatively high rates of capacity underutilization in manufacturing industries are observed. This paper develops a simple model which explains the existence of excess capacity when there are quantitative restrictions on key inputs. This model is tested using data for manufacturing industries in India, and the results indicate that shortages in domestic rather than imported inputs imposed binding constraints on capacity utilization rates.
Sayuri Shirai

Import Shares with Indonesia and Korea, 1975 and 1985 4. Japan: Intra-industry Trade Indexes in Manufacturing with Korea and Indonesia, 1975 and 1985 5. Japan: Ratios of Net Exports in Total Trade Volume with Korea and Indonesia, 1975 and 1985 6. Japan: Production Share of Each Manufacturing Sector in total Manufacturing Output with Korea and Indonesia, 1975 and 1985 Figures 1. Japan: Comparison of Intra-industry Indexes in Manufacturing with Korea, 1975 and 1985 2. Japan: Comparison of Intra-industry Indexes in Manufacturing with Indonesia, 1975 and 1985