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Measures of Intra-Industry Trade as Indicators for Factor Market Disruption

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  • Peter B. Dixon
  • Jayant Menon

Abstract

Intra-industry trade (IIT) related concepts have often been used as indicators of the extent to which trade growth can be accommodated without factor market disruption. The most commonly used indicators have been movements in the Grubel-Lloyd (GL) index. However, GL-based indicators are sometimes misleading and, at best, they give qualitative information only. We develop two other indicators. The first involves computing changes in IIT. While this method provides a precise measure of the contribution of growth in IIT to total trade (TT) growth, it tends to overestimate the contribution of non-disruptive trade growth. This problem is overcome by our second indicator, dynamic intra-industry trade or matched changes in trade. All our indicators are illustrated with data for 133 Australian manufacturing industries.

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Bibliographic Info

Paper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number g-113.

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Date of creation: Apr 1995
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Handle: RePEc:cop:wpaper:g-113

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Related research

Keywords: intra-industry trade; matched trade; factor market disruption;

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References

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  1. Jayant Menon & Peter Dixon, 1996. "How important is intra-industry trade in trade growth?," Open Economies Review, Springer, vol. 7(2), pages 161-175, April.
  2. Caves, Richard E, 1981. "Intra-Industry Trade and Market Structure in the Industrial Countries," Oxford Economic Papers, Oxford University Press, vol. 33(2), pages 203-23, July.
  3. 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.
  4. Jayant Menon, 1994. "Trade Liberalisation, Closer Economic Relations and Intra-Industry Specialisation," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 27(2), pages 31-42.
  5. Pomfret, Richard, 1985. "Categorical Aggregation and International Trade: A Comment," Economic Journal, Royal Economic Society, vol. 95(378), pages 483-85, June.
  6. Finger, J M, 1975. "Trade Overlap and Intra-Industry Trade," Economic Inquiry, Western Economic Association International, vol. 13(4), pages 581-89, December.
  7. Greenaway, David & Milner, Chris R, 1983. "On the Measurement of Intra-Industry Trade," Economic Journal, Royal Economic Society, vol. 93(372), pages 900-908, December.
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Cited by:
  1. Abdul K. M. Azhar & Robert J. R. Elliott, 2008. "On the Measurement of Changes in Product Quality in Marginal Intra-Industry Trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(2), pages 225-247, July.
  2. Abdul Azhar & Robert Elliott, 2003. "On the measurement of trade-induced adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 139(3), pages 419-439, September.
  3. Faruk Aydin & Hulya Saygili & Mesut Saygili & Gokhan Yilmaz, 2010. "Dis Ticarette Kuresel Egilimler ve Turkiye Ekonomisi," Working Papers 1001, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  4. Jayant Menon, 1996. "How Reliable are Intra-Industry Trade Measures as Indicators of Adjustment Costs?," Centre of Policy Studies/IMPACT Centre Working Papers g-119, Victoria University, Centre of Policy Studies/IMPACT Centre.
  5. Productivity Commission, 2005. "Trends in Australian Agriculture," Research Papers 0502, Productivity Commission, Government of Australia.
  6. Houston Davis & Brian Noland, 2003. "Understanding Human Capital Through Multiple Disciplines: The Educational Needs Index," Social Indicators Research, Springer, vol. 61(2), pages 147-174, February.
  7. David Greenaway & Michelle Haynes & Chris Milner, 2002. "Adjustment, employment characteristics and intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(2), pages 254-276, June.
  8. Anonymous, 2005. "Trends in Australian Agriculture," Commission Research Papers 31903, Productivity Commission.
  9. Jayant Menon & Peter Dixon, 1996. "How important is intra-industry trade in trade growth?," Open Economies Review, Springer, vol. 7(2), pages 161-175, April.

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