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Intra-Industry Trade : Methodological Issues Reconsidered

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Lionel Fontagne
Michael Freudenberg

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Abstract

In the 1960s, the evidence of intra-industry trade (IIT) between countries of similar development levels severely limited the scope of traditional theories of international trade based on the concept of comparative advantage. Originally, such simultaneous exports and imports within industries led to a concept "in search of a (new) theory". Today, a synthesis of determinants of IIT and inter-industry trade is attained. And progress during the last 15 years has been such that today, it is the theory which is in search of an appropriate empirical methodology. The contemporary theoretical synthesis is based on the widespread view that monopolistic competition and (internal) increasing returns lead to IIT between similar countries, whereas the old comparative advantage is still be at work for countries separated by a high economic distance, i.e. a large difference in factor endowments, technology levels etc.

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Paper provided by CEPII research center in its series Working Papers with number 1997-01.

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Date of creation: Jan 1997
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Handle: RePEc:cii:cepidt:1997-01

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Related research
Keywords: inta-industry trade comparative advantage product differenciation monopolistic competition trade policy

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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F10 - International Economics - - Trade - - - General
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade

Cited by:
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  2. Konchyn, Vadym, 2006. "The Evolution of Ukrainian Economy: New Trade Theory Evidence," MPRA Paper 588, University Library of Munich, Germany, revised 07 Sep 2006. [Downloadable!]
  3. Hedi Bchir & Yvan Decreux & Jean-Louis Guerin & Sebastien Jean, 2002. "MIRAGE, a Computable General Equilibrium Model for Trade Policy Analysis," Working Papers 2002-17, CEPII research center. [Downloadable!]
  4. Juliette Milgram Baleix & Ana I. Moro Egido, 2006. "Do Endowments Matter for Vertical Intra-Industry Trade with Emergent Countries? Empirical Evidence for Spain," ThE Papers 06/10, Department of Economic Theory and Economic History of the University of Granada.. [Downloadable!]
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  5. Joakim Gullstrand, 2002. "Demand patterns and vertical intra-industry trade with special reference to North-South trade," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 11(4), pages 429-455, December. [Downloadable!] (restricted)
  6. Johansson, Sara, 2007. "R&D Accessibility and Comparative Advantages in Quality Differentiated Goods," Working Paper Series in Economics and Institutions of Innovation 107, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies. [Downloadable!]
  7. José V. Blanes & Juliette Milgram Baleix, 2006. "The Free Trade Agreement Morocco-EU: a simulation of the impact on EU exports," ThE Papers 06/09, Department of Economic Theory and Economic History of the University of Granada.. [Downloadable!]
  8. Michel Fouquin & Khalid Sekkat & J. Malek Mansour & Nanno Mulder & Laurence Nayman, 2001. "Sector Sensitivity to Exchange Rate Fluctuations," Working Papers 2001-11, CEPII research center. [Downloadable!]
  9. Juliette Milgram & Ana Moro-Egido, 2005. "Trade types with Developed and Developing Countries What can we learn from Spanish data?," ThE Papers 05/08, Department of Economic Theory and Economic History of the University of Granada.. [Downloadable!]
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  10. Stefano Chiarlone, 2000. "Evidence of Product Differentiation and Relative Quality in Italian Trade," CESPRI Working Papers 114, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Jul 2000. [Downloadable!]
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  11. Ana Isabel, Moreno & Hector Mauricio, Posada, 2006. "Evolución del Comercio Intraindustrial entre las regiones colombianas y la Comunidad Andina, 1990-2004: un análisis comparativo," MPRA Paper 4936, University Library of Munich, Germany. [Downloadable!]
  12. J. Caetano & A. Galego & E. Vaz & C. Vieira & I. Vieira, 2002. "The Eastward Enlargement of the Eurozone: Trade and FDI," Eastward Enlargement of the Euro-zone Working Papers wp07, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Aug 2002. [Downloadable!]
  13. Vadym Konchyn, 2004. "Komparative Wettbewerbsposition der Ukraine in den Produktions- und Handelsbeziehungen im Weltwirtschaftssystem und mit dem sich erweiternden Europa," Kiel Working Papers 1219, Kiel Institute for the World Economy. [Downloadable!]
  14. Carlos Cortinhas, 2005. "Intra-Industry Trade and Business Cycles in ASEAN," NIPE Working Papers 7/2005, NIPE - Universidade do Minho. [Downloadable!]
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  15. Joakim Gullstrand, 2002. "Does the measurement of intra-industry trade matter?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(2), pages 317-339, June. [Downloadable!] (restricted)
  16. Alessia Amighini & Stefano Chiarlone, 2003. "Rischi e opportunità dell’integrazione commerciale cinese per la competitività internazionale dell'Italia," CESPRI Working Papers 149, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Nov 2003. [Downloadable!]
  17. Juliette Milgram-Baleix & Ana Isabel Moro-Egido, 2005. "Intra-industry trade with emergent countries: what can we learn from spanish data?," Economics Bulletin, Economics Bulletin, vol. 6(12), pages 1-17. [Downloadable!]
  18. Michael Freudenberg & Francoise Lemoine, 1999. "Central And Eastern European Countries In The International Division Of Labour In Europe," Working Papers 1999-05, CEPII research center. [Downloadable!]
  19. A K M Azhar & Robert R J Elliott, 2007. "On the Measurement of Changes in Product Quality in Marginal Intra-Industry Trade," Discussion Papers 07-09, Department of Economics, University of Birmingham. [Downloadable!]
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  20. Lionel Fontagné & Michael Freudenberg & Guillaume Gaulier, 2006. "A Systematic Decomposition of World Trade into Horizontal and Vertical IIT," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 142(3), pages 459-475, October. [Downloadable!] (restricted)
  21. Algieri, Bernadina, 2004. "Trade specialisation patterns: The case of Russia," BOFIT Discussion Papers 19/2004, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  22. Sebastien Jean & Olivier Bontout, 1998. "Sensibilite des salaires relatifs aux chocs exogenes de commerce international et de progres technique: Une evaluation d'equilibre general," Working Papers 1998-09, CEPII research center. [Downloadable!]
  23. Jørgen Nielsen & Teit Lüthje, 2002. "Tests of the empirical classification of horizontal and vertical intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(4), pages 587-604, December. [Downloadable!] (restricted)
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