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The Nature and Causes of Intra-Industry Trade: Back to the Comparative Advantage Explanation? The Case of Spain

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Abstract

The aim of this paper is to contribute empirically to the knowledge of the nature and causes of intra-industry trade (IIT), distinguishing between vertical and horizontal IIT. To this end, we estimate a more general empirical model than those used in previous studies, by introducing simultaneously both national and industry-specific variables which include measures for human and technological capital endowments. The results show that vertical IIT is positively related with industry technological intensity and differences in human and technological capital endowments between countries. On the other hand, horizontal IIT is explained by the traditional monopolistic competition model.

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  • Carmela Martin & Jose V. Blanes, 1999. "The Nature and Causes of Intra-Industry Trade: Back to the Comparative Advantage Explanation? The Case of Spain," European Economy Group Working Papers 1, European Economy Group.
    • Handle: RePEc:eeg:euroeg:1
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