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Liberalization and United States' Intra-Industry Trade

Author

Listed:
  • Nuno Carlos Leit o

    (Polytechnic Institute of Santar m, and CEFAGE, Evora University, PORTUGAL)

  • Muhammad Shahbaz

    (COMSATS Institute of Information Technology, Lahore, Pakistan.)

Abstract

The recent trend of globalization has given rise to a new paradigm in international economics, i.e. the simultaneous exports and imports of a product within country or a particular industry called intra-industry trade (IIT) or two-way trade. This study examines country-levels determinants of intra-industry trade, in U.S. trade. The manuscript applies a static and dynamic panel data approach. In contrast to previous studies, this paper used a dynamic panel data to solve the problems of serial correlation and endogeneity. The results indicate that IIT occurs more frequently among countries that are similar in terms of factor endowments. We also introduce economic dimension; this proxy confirms the positive effect of IIT. Our results also confirm the hypothesis that trade increases if the transportation costs decrease.

Suggested Citation

  • Nuno Carlos Leit o & Muhammad Shahbaz, 2012. "Liberalization and United States' Intra-Industry Trade," International Journal of Economics and Financial Issues, Econjournals, vol. 2(4), pages 505-512.
  • Handle: RePEc:eco:journ1:2012-04-13
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    References listed on IDEAS

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    More about this item

    Keywords

    Globalization; Intra-industry trade; Panel data; United States.;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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