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Intra-industry Trade of Transition Countries: Trends and Determinants

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Author Info
Yener Kandogan ()
Abstract

This paper analyzes trends in different components of trade of transition countries. To explain the cross-country differences, the paper points out the important distinction between the determinants of inter-industry trade and intra-industry trade (IIT), and horizontal and vertical IIT. Using varieties of gravity models, it is shown that variables from Increasing Returns Trade Theory, such as scale economies, similarity of income levels, and number of varieties produced play important roles in IIT, especially in horizontal IIT, whereas factors such as comparative advantage, dissimilarity in income levels, and having more developed trade partners of Heckscher-Ohlin Trade Theory are crucial in determining inter-industry trade and vertical IIT to a lesser degree.

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Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number 2003-566.

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Length: 27 pages
Date of creation: 26 Jun 2003
Date of revision:
Handle: RePEc:wdi:papers:2003-566

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Related research
Keywords: Vertical and horizontal intra-industry trade; transition countries; gravity models;

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Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
P2 - Economic Systems - - Socialist Systems and Transition Economies

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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.:
  1. Chonira Aturupane & Simeon Djankov & Bernard Hoekman, 1999. "Horizontal and vertical intra-industry trade between Eastern Europe and the European union," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 135(1), pages 62-81, March. [Downloadable!] (restricted)
  2. Simon J. Evenett & Wolfgang Keller, 1998. "On Theories Explaining the Success of the Gravity Equation," NBER Working Papers 6529, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Greenaway, David, 1998. "Economic Geography, Comparative Advantage and Trade Within Industries: Evidence from the OECD," CEPR Discussion Papers 1857, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  4. Davis, Donald R., 1995. "Intra-industry trade: A Heckscher-Ohlin-Ricardo approach," Journal of International Economics, Elsevier, vol. 39(3-4), pages 201-226, November. [Downloadable!] (restricted)
  5. Broll, Udo & Gilroy, B Michael, 1988. "Intra-industry Trade and Differences in Technology," Scottish Journal of Political Economy, Scottish Economic Society, vol. 35(4), pages 399-403, November.
  6. Djankov, Simeon & Hoekman, Bernard, 1996. "Intra-Industry Trade, Foreign Direct Investment and the Reorientation of East European Exports," CEPR Discussion Papers 1377, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  7. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-53, February. [Downloadable!] (restricted)
  8. Bergstrand, Jeffrey H, 1990. "The Heckscher-Ohlin-Samuelson Model, the Linder Hypothesis and the Determinants of Bilateral Intra-industry Trade," Economic Journal, Royal Economic Society, vol. 100(403), pages 1216-29, December. [Downloadable!] (restricted)
  9. Deardoff, A.V., 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," Working Papers 382, Research Seminar in International Economics, University of Michigan.
  10. Durkin, John T, Jr & Krygier, Markus, 1998. "Comparative Advantage and the Pattern of Trade within Industries," Review of International Economics, Blackwell Publishing, vol. 6(2), pages 292-306, May.
  11. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August. [Downloadable!] (restricted)
  12. Greenaway, David & Hine, Robert C & Milner, Chris, 1995. "Vertical and Horizontal Intra-industry Trade: A Cross Industry Analysis for the United Kingdom," Economic Journal, Royal Economic Society, vol. 105(433), pages 1505-18, November. [Downloadable!] (restricted)
  13. repec:fth:michin:382 is not listed on IDEAS
  14. Deardorff, A.V., 1995. "Determinants of Bilateral Trade : Does Gravity Work in a Neoclassical World?," Papers 95-05, Michigan - Center for Research on Economic & Social Theory.
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  15. Y. Kandogan, 2003. "Reconsidering the adjustment costs of the Europe agreements," Applied Economics Letters, Taylor and Francis Journals, vol. 10(2), pages 63-68, February. [Downloadable!] (restricted)
  16. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November. [Downloadable!] (restricted)
  17. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Vogiatzoglou, Klimis, 2005. "Varieties or Qualities? Horizontal and Vertical Intra-industry Trade within the NAFTA Trade Bloc," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 6(2). [Downloadable!]
  2. Andrea Zaghini, 2005. "Evolution of trade patterns in the new EU member states," Temi di discussione (Economic working papers) 568, Bank of Italy, Economic Research Department. [Downloadable!]
    Other versions:
  3. Konchyn, Vadym, 2006. "The Evolution of Ukrainian Economy: New Trade Theory Evidence," MPRA Paper 588, University Library of Munich, Germany, revised 07 Sep 2006. [Downloadable!]
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