This paper contributes to empirical research of intra-industry trade, especially vertical intraindustry trade (VIIT), by two aspects. Firstly, we separate VIIT into higher-export-price VIIT and lower-export-price VIIT. Secondly, we give attention to R&D and FDI stock in explaining VIIT determinants. Applied to panel data representing South Korea's bilateral trade with 15 OECD countries and Taiwan from 1996 through 2003, this alternative makes an intricate understanding of the VIIT determinants possible. Main empirical findings are that South Korea's R&D investments focus on price competitiveness while its inward FDI seeks efficiency and its outward FDI seeks a market in this period.

China's economic development is characterized by progressive integration with international production chains as an assembly producer. Japan and South Korea are the major partners providing intermediate products to China. The present paper analyzes the Chinese intermediate sector's present condition and evolutionary characteristics revealed in bilateral trade with Japan and South Korea. The analysis uses the framework of new trade theory represented by "intra-industry trade". Trade statistics from 1997 to 2004 are analyzed using the database published by the OECD. Results show that China's inter-industrial evolution is characterized by its expanding positioning in the manner of the flying geese development paradigm of Asian countries. Furthermore, intra-industrial evolution is characterized by a concentration on price competitiveness. The framework and results of the industrial analysis presented in this paper assist in the understanding of China's manufacturing evolution and of the policy-making decisions taken in the process. Copyright 2007 Institute of World Economics and Politics, Chinese Academy of Social Sciences.

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