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Varieties or Qualities? Horizontal and Vertical Intra-industry Trade within the NAFTA Trade Bloc

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Author Info
Vogiatzoglou, Klimis
Abstract

This article investigates empirically the nature and the dynamics of intra-regional trade in North America. Specifically, we analyze intra-NAFTA patterns of horizontal and vertical intra-industry trade - H(V)IIT - in the United States, Canada and Mexico over the 1992-2002 period and examine some industry characteristics of observed IIT patterns for each IIT component. The results indicate that though HIIT and VIIT exhibit different trends, both IIT types are important in labour/resource-intensive sectors, suggesting that comparative advantage may be an important factor in intra-NAFTA IIT. The most striking finding is that HIIT is consistently increasing, while VIIT exhibits a significant downward trend. Hence, our findings suggest that intra-NAFTA IIT has increasingly become an exchange of different varieties rather than different qualities, indicating to some extent an economic convergence process within the NAFTA trade bloc.

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Publisher Info
Article provided by Estey Centre for Law and Economics in International Trade in its journal Estey Centre Journal of International Law and Trade Policy.

Volume (Year): 06 (2005)
Issue (Month): 2 ()
Pages:
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Handle: RePEc:ags:ecjilt:23887

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Keywords: International Relations/Trade;

References listed on IDEAS
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  1. Fukao, Kyoji & Ishido, Hikari & Ito, Keiko, 2003. "Vertical intra-industry trade and foreign direct investment in East Asia," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 468-506, December. [Downloadable!] (restricted)
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  2. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-59, December. [Downloadable!] (restricted)
  3. Lionel Fontagne & Michael Freudenberg & Nicholas Peridy, 1997. "Trade Patterns Inside the Single Market," Working Papers 1997-07, CEPII research center. [Downloadable!]
  4. Kandogan, Yener, 2003. "Intra-industry trade of transition countries: trends and determinants," Emerging Markets Review, Elsevier, vol. 4(3), pages 273-286, September. [Downloadable!] (restricted)
  5. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-73, October. [Downloadable!] (restricted)
  6. Marius Brülhart & Robert J. R. Elliott,, . "Adjustment to the European Single Market: Inferences from Intra-Industry Trade Patterns," Discussion Papers 96/15, University of Nottingham, CREDIT.
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  7. Mary E. Burfisher & Sherman Robinson & Karen Thierfelder, 2001. "The Impact of NAFTA on the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 125-144, Winter. [Downloadable!] (restricted)
  8. Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 1-48, March. [Downloadable!] (restricted)
  9. Hummels, David & Levinsohn, James, 1995. "Monopolistic Competition and International Trade: Reconsidering the Evidence," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 799-836, August. [Downloadable!] (restricted)
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  10. Lancaster, Kelvin, 1980. "Intra-industry trade under perfect monopolistic competition," Journal of International Economics, Elsevier, vol. 10(2), pages 151-175, May. [Downloadable!] (restricted)
  11. Greenaway, David & Hine, Robert C & Milner, Chris, 1995. "Vertical and Horizontal Intra-industry Trade: A Cross Industry Analysis for the United Kingdom," Economic Journal, Royal Economic Society, vol. 105(433), pages 1505-18, November. [Downloadable!] (restricted)
  12. Falvey, Rodney E., 1981. "Commercial policy and intra-industry trade," Journal of International Economics, Elsevier, vol. 11(4), pages 495-511, November. [Downloadable!] (restricted)
  13. Yener Kandogan, 2003. "Intra-industry Trade of Transition Countries: Trends and Determinants," William Davidson Institute Working Papers Series 2003-566, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  14. Dene T. Hurley, 2003. "Horizontal And Vertical Intra-Industry Trade: The Case Of Asean Trade In Manufactures," International Economic Journal, Korean International Economic Association, vol. 17(4), pages 1-14, December. [Downloadable!] (restricted)
  15. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November. [Downloadable!] (restricted)
  16. Lionel Fontagne & Michael Freudenberg, 1997. "Intra-Industry Trade : Methodological Issues Reconsidered," Working Papers 1997-01, CEPII research center. [Downloadable!]
  17. Jacob Kol & L. Mennes, 1989. "Corrections for trade imbalance: A survey," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 125(4), pages 703-717, December. [Downloadable!] (restricted)
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