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Vertically Differentiated Trade and Differences in Factor Endowment: The Case of Agri‐Food Products between Hungary and the EU

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  • Imre Fertö

Abstract

The paper investigates the relationship between factor endowment and vertical intraindustry trade (IIT)in agri‐food products between Hungary and the EU. Intra‐industry trade is separated into its horizontal and vertical components on the basis of differences in unit values. Three different approaches to measuring IIT are employed and these are then tested using panel regression models. Results show vertical type trade is predominant in total IIT for agri‐food products. In order to achieve more general results, we consider different types of productive factors: land, human and physical capital. Using Flam and Helpman type vertically differentiated trade models, we find a positive relationship between factor endowment and vertical IIT. More importantly, using a measure of IIT that reflects the level of trade produces better regression results than those based on the degree or share of IIT.

Suggested Citation

  • Imre Fertö, 2005. "Vertically Differentiated Trade and Differences in Factor Endowment: The Case of Agri‐Food Products between Hungary and the EU," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(1), pages 117-134, March.
    • Handle: RePEc:bla:jageco:v:56:y:2005:i:1:p:117-134
    DOI: 10.1111/j.1477-9552.2005.tb00125.x
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    References listed on IDEAS

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    1. Chang, Ching-Cheng & Yang, Tuan-Chen Ou & Huang, Deng-Shing, 2001. "Intra-Industry Trade Between Taiwan And Asean-5 In The Agro-Food Sector: Patterns And Determinants," 2001 Annual meeting, August 5-8, Chicago, IL 20601, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Sun, Changyou & Koo, Won W., 2002. "Horizontal And Vertical Intra-Industry Trade In The U.S. Food Processing Industry," Agribusiness & Applied Economics Report 23629, North Dakota State University, Department of Agribusiness and Applied Economics.
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    4. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
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    Cited by:

    1. Ferto, Imre & Jambor, Attila, 2013. "Vertical Intra-Industry Trade and the EU Accession: The Case of Hungarian Agri-Food Sector," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158847, Agricultural Economics Society.
    2. Chakraborty, Shuvo & Van Der Sluis, Evert, "undated". "U.S.-South America Intra-Industry Trade in Agricultural and Food Products," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 261224, Agricultural and Applied Economics Association.
    3. Attila Jambor, 2013. "Country-specific determinants of horizontal and vertical intra-industry agri-food trade of the Visegrad Countries," FIW Working Paper series 104, FIW.
    4. Saeed Rasekhi & Shideh Shojaee, 2012. "Country-specific Determinants of Intra Industry Trade Types of Agricultural Sector in Selected Developing Countries," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 17(1), pages 85-99, winter.
    5. Ciaian, Pavel & Kancs, d'Artis & Pokrivcak, Jan, 2008. "Comparative Advantages, Transaction Costs and Factor Content in Agricultural Trade: Empirical Evidence from the CEE," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44135, European Association of Agricultural Economists.
    6. Bojnec, Stefan & Ferto, Imre, 2009. "Former Central European Free Trade Agreement countries’ agri-food trade specialisation," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 58(08), pages 1-9, November.
    7. Károly Attila SOÓS, 2013. "The Role of Intra-Industry Trade in the Industrial Upgrading of the 10 CEECs New Members of the European Union," KIER Working Papers 868, Kyoto University, Institute of Economic Research.
    8. Fertő, Imre, 2013. "Intra-industry trade for agri-food products in the enlarged European Union," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158846, Agricultural Economics Society.
    9. Ciaian, Pavel & Kancs, d'Artis & Pokrivcak, Jan, 2011. "Comparative Advantages, Transaction Costs and Factor Content in Agricultural Trade: Empirical Evidence from the CEE - Vantaggi comparati, costi di transazione e contenuto dei fattori nel commercio agr," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 64(1), pages 67-101.
    10. Jambor, Attila & Torok, Aron, 2013. "Intra-industry agri-food trade of the Baltic Countries," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158684, Agricultural Economics Society.
    11. Štefan Bojnec & Imre Fertő, 2017. "Quality Upgrades of EU Agri-Food Exports," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 269-279, February.
    12. Bojnec, Stefan & Ferto, Imre, 2016. "Patterns and Drivers of the Agri-Food Intra-Industry Trade of European Union Countries," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(2), pages 1-22, May.
    13. García, Pablo Marcelo, 2005. "Measuring Willingness-to-Pay in Discrete Chice Models with Semi-Parametric Techniques," Revista Latinoamericana de Desarrollo Economico, Carrera de Economía de la Universidad Católica Boliviana (UCB) "San Pablo", issue 5, pages 83-100, Octubre.
    14. Ferto, Imre & Bojnec, Stefan, 2015. "Quality upgrading in the European-Union agri-food exports," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204225, Agricultural Economics Society.
    15. Abdul Azhar & Robert Elliott, 2011. "A Measure of Trade Induced Adjustment in Volume and Quality Space," Open Economies Review, Springer, vol. 22(5), pages 955-968, November.
    16. Ján POKRIVČÁK & Pavel CIAIAN & d'Artis KANCS, 2011. "Modelling the factor content of agricultural trade," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 57(8), pages 370-383.
    17. Fertő, Imre, 2006. "Vertikálisan és horizontálisan differenciált, ágazaton belüli kereskedelem az Európai Unió tejpiacán [Trade within vertically and horizontally differentiated industries on the milk market of the Eu," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 526-539.
    18. BOJNEC, Stefan & FERTO, Imre, 2009. "Determinants of agro-food trade competition of Central European countries with the European Union," China Economic Review, Elsevier, vol. 20(2), pages 327-337, June.
    19. Imre Ferto & Attila Jambor, 2015. "Drivers of vertical intra-industry trade: the case of the Hungarian agri-food sector," Agricultural Economics, International Association of Agricultural Economists, vol. 46(1), pages 113-123, January.
    20. Attila JAMBOR & Jeremias BALOGH & Peter KUCSERA, 2016. "Country and industry specific determinants of intra-industry agri-food trade in the Baltic Countries," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 62(6), pages 280-291.
    21. Štefan Bojnec & Imre Fertő, 2012. "Agro-food exports variety from the Central and Eastern European countries," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(1), pages 1-9.
    22. repec:kap:iaecre:v:16:y:2010:i:3:p:311-324 is not listed on IDEAS
    23. Fertő, Imre, 2015. "Horizontal intra-industry trade in agri-food products in the enlarged European Union," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 117(2), pages 1-7, August.
    24. Imre Ferto & Stefan Bojnec, 2012. "EU Enlargement and Agro-Food Export Performance on EU Market Segments," CERS-IE WORKING PAPERS 1206, Institute of Economics, Centre for Economic and Regional Studies.

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