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Marginal Intra-Industry Trade: Measurement and Relevance

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Author Info

  • Marius Brülhart

Abstract

The presence of high and growing levels of intra-industry trade (IIT) is commonly interpreted as a reason to expect low adjustment costs following trade liberalisation. This paper argues that trade-induced adjustment pressures are not directly related to the level of static IIT but to the structure of change in trade flows. The main aspect of this structure is the proportion of marginal intra-industry trade (MIIT). It is argued that none of the measures of MIIT used to date are entirely satisfactory. Three complimentary measures are thus suggested. The "A" index captures MIIT while preserving the statistical and presentational advantages of the Grubel-Lloyd index of IIT. The "B" index of IIT is related to MIIT as well as to sectoral trade performance, which is particularly relevant for one-country studies. The "C" measure serves to scale MIIT relative to other variables, such as gross trade flows or employment. A numerical example is appended, illustrating the properties of the various measures.

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Bibliographic Info

Paper provided by Trinity College Dublin, Department of Economics in its series Economics Technical Papers with number 942.

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Date of creation: 1994
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Handle: RePEc:tcd:tcduet:942

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Cited by:
  1. Choorikkad Veermani, 2004. "Trade liberalisation, multinational involvement, and intra-industry trade in manufacturing," Indian Council for Research on International Economic Relations, New Delhi Working Papers 143, Indian Council for Research on International Economic Relations, New Delhi, India.

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