Horizontal and vertical intra-industry trade of Nafta and Mercosur: The case of the automobile industry
AbstractThe NAFTA and MERCOSUR agreements seem to have accelerated the regional integration process respectively within North and South of America. In the South in particular, MERCOSUR has led to trade liberalisation and deregulation, which has resulted in significant growth of its regional trade. In this article, we study the pattern of that trade growth in the automobile industry. Our results highlight an increase of intra-industry trade in the corresponding industry since the beginning of the 1990s. Firstly, we use the Grubel and Lloyd indicator (1975). Secondly, following Abd-el-Rahman (1991), Greenaway et al. (1995), Fontagné and Freudenberg (1997), we distinguish horizontally differentiated goods from vertically differentiated goods using a comparison of the unit values. With the increase of intra-industry trade, it appears that MERCOSUR has favoured in particular the development of trade in vertically differentiated goods. In NAFTA, intra-industry trade exists in most sectors and in two bilateral relations (US-Canada and US-Mexico). In MERCOSUR, the automobile industry has experienced the highest rate of growth in intraindustry trade, which accounts for 66% of total trade and 90% of all intra-regional trade. Thirdly, we analyse the nature of that increase and more precisely, the determinants of intra-industry trade. In order to explain the pattern of trade for the automobile industry, we use a gravity-type model taking into account some country-specific variables.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 43928.
Date of creation: Nov 2001
Date of revision:
Intra-Industry Trade; Regional Integration; NAFTA; MERCOSUR; Automotive Industry;
Other versions of this item:
- Sylvie MONTOUT & Jean-Louis MUCCHIELLI & Soledad ZIGNAGO, 2002. "Regionalization And Intra-Industry Trade. An Analysis Of Automobile Industry Trade In Nafta," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 16, pages 137-159.
- F15 - International Economics - - Trade - - - Economic Integration
- F10 - International Economics - - Trade - - - General
- L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
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