Intra-Industry Trade has been repeatedly attested since the 1960s and justified on the grounds of the new approaches to international trade based on imperfect competition and differentiated products. Up to now however, scholars were relying on partial assessments of this phenomenon. We provide here a systematic decomposition of world trade using harmonised bilateral flows for some 5,000 products, into three trade types: inter-industry, intra-industry in horizontally versus vertically differentiated products, over the period 1989-2002. We show that the increase in IIT at the world level is due to two-way trade of vertically differentiated products. However inter-industry trade has recently recovered, due to the increasing participation of emerging economies in world trade.
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Paper provided by CEPII research center in its series Working Papers with number
2005-10.
Find related papers by JEL classification: F14 - International Economics - - Trade - - - Country and Industry Studies of Trade F15 - International Economics - - Trade - - - Economic Integration
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