A Test of Linder Hypothesis for NICs` Trade

A Test of Linder Hypothesis for NICs` Trade

The study examines the validity of the Linder hypothesis from the perspective of NICs`(Korea, Singapore, Taiwan and Hong Kong) trade with the trading partners for the period 1980-1999. The analysis employs the per capita income differential as a determinant of trade patterns among trade partners and presents evidence in support of the Linder hypothesis. The findings imply that these countries trade more intensively with other countries that have similar per capita income levels, as predicted by Linder. The study also reveals that the Linder hypothesis is relatively stronger in Hong Kong and Singapore than in Korea and Taiwan, which might be related to recent globalization pressures. The study results also show that the sum of the per capita income for the exporting and importing countries and the coefficients of distance have the expected signs and are statistically significant.