In this paper, we provide an overview of the development of intraindustry (IIT) trade between Japan and various European countries, including both old and new EU members, as well as emerging Eastern European countries. For the measurement of intra-industry trade, we construct a vertical intraindustry trade (VIIT) measure for various margins of unit price ratios, in addition to a Grubel-Lloyd index. By varying the margins from zero to significantly large values, the share of VIIT in total IIT changes from unity to zero, corresponding to the distributional characteristics of VIIT for each European country. Our empirical model attempts to explain the distributional characteristics of VIIT through foreign direct investments and country characteristics, in addition to traditional determinants of IIT, such as differences in GDP per capita, average GDP, and smaller and larger GDPs. Our sample covers 1988 to 2004 for bilateral trade between Japan and 31 European countries. Our econometric methodology for this panel data uses fixed-effect model estimation for static IIT. We find that intra-industry trade between European countries and Japan increases with their corresponding GDPs. Our preliminary results indicate that it is important to measure a wider range of quality based on relative prices rather than the traditional ratio used in the literature.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon. in its series Working Papers with number
2008/53.
Length: Date of creation: Nov 2008 Date of revision: Handle: RePEc:ise:isegwp:wp532008
Contact details of provider: Postal: Department of Economics, School of Economics and Management (ISEG), Technical University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL Web page: http://www.iseg.utl.pt/departamentos/economia/
For technical questions regarding this item, or to correct its listing, contact: (Vitor Escaria).
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: