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Liberalization and United States’ Intra-Industry Trade

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Author Info

  • Nuno Carlos Leitão

    (Polytechnic Institute of Santarém, and CEFAGE, Evora University, PORTUGAL)

  • Muhammad Shahbaz

    (COMSATS Institute of Information Technology, Lahore, Pakistan.)

Abstract

The recent trend of globalization has given rise to a new paradigm in international economics, i.e. the simultaneous exports and imports of a product within country or a particular industry called intra-industry trade (IIT) or two-way trade. This study examines country-levels determinants of intra-industry trade, in U.S. trade. The manuscript applies a static and dynamic panel data approach. In contrast to previous studies, this paper used a dynamic panel data to solve the problems of serial correlation and endogeneity. The results indicate that IIT occurs more frequently among countries that are similar in terms of factor endowments. We also introduce economic dimension; this proxy confirms the positive effect of IIT. Our results also confirm the hypothesis that trade increases if the transportation costs decrease.

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Bibliographic Info

Article provided by Econjournals in its journal International Journal of Economics and Financial Issues.

Volume (Year): 2 (2012)
Issue (Month): 4 ()
Pages: 505-512

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Handle: RePEc:eco:journ1:2012-04-13

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Related research

Keywords: Globalization; Intra-industry trade; Panel data; United States.;

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References

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  14. Balassa, Bela & Bauwens, Luc, 1987. "Intra-industry Specialisation in a Multi-country and Multi-industry Framework," Economic Journal, Royal Economic Society, vol. 97(388), pages 923-39, December.
  15. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
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  17. Lancaster, Kelvin, 1980. "Intra-industry trade under perfect monopolistic competition," Journal of International Economics, Elsevier, vol. 10(2), pages 151-175, May.
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