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How important is intra-industry trade in trade growth?

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  • Jayant Menon
  • Peter Dixon

Abstract

Empirical work on intra-industry trade (IIT) is almost 30 years old. Initial research sought to identify if IIT was a significant share of total trade (TT). The Grubel-Lloyd (GL) index was widely used for this purpose. Interest has since shifted to the changing importance of IITover time. Using movements in the GL index to infer the importance of IIT over time is not only vague, but can be misleading. In this article, we measure the contributions of growth in net trade (NT) and IIT to the growth in TT. To understand changes in IIT over time, we also derive the contributions of imports and exports to the growth in TT, NT, and IIT. All our formulas are illustrated with data for 205 Australian manufacturing industries. Copyright Kluwer Academic Publishers 1996

Suggested Citation

  • Jayant Menon & Peter Dixon, 1996. "How important is intra-industry trade in trade growth?," Open Economies Review, Springer, vol. 7(2), pages 161-175, April.
    • Handle: RePEc:kap:openec:v:7:y:1996:i:2:p:161-175
    DOI: 10.1007/BF01891902
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    References listed on IDEAS

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    1. Peter B. Dixon & Jayant Menon, 1997. "Measures of Intra‐Industry Trade as Indicators of Factor Market Disruption," The Economic Record, The Economic Society of Australia, vol. 73(222), pages 233-247, September.
    2. Caves, Richard E, 1981. "Intra-Industry Trade and Market Structure in the Industrial Countries," Oxford Economic Papers, Oxford University Press, vol. 33(2), pages 203-223, July.
    3. Finger, J M, 1975. "Trade Overlap and Intra-Industry Trade," Economic Inquiry, Western Economic Association International, vol. 13(4), pages 581-589, December.
    4. Yung Chul Park & Won-Am Park, 1991. "Changing Japanese Trade Patterns and the East Asian NICs," NBER Chapters, in: Trade with Japan: Has the Door Opened Wider?, pages 85-120, National Bureau of Economic Research, Inc.
    5. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-973, October.
    6. Jayant Menon, 1994. "Trade Liberalisation, Closer Economic Relations and Intra‐Industry Specialisation," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 27(2), pages 31-42, April.
    7. Greenaway, David & Milner, Chris R, 1983. "On the Measurement of Intra-Industry Trade," Economic Journal, Royal Economic Society, vol. 93(372), pages 900-908, December.
    8. Jayant Menon & Peter B. Dixon,, "undated". "Regional Trading Agreements and Intra-Industry Trade," Discussion Papers 95/14, University of Nottingham, CREDIT.
    9. Paul Krugman, 1991. "Trade with Japan: Has the Door Opened Wider?," NBER Books, National Bureau of Economic Research, Inc, number krug91-1, March.
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    1. Peter B. Dixon & Jayant Menon, 1997. "Measures of Intra‐Industry Trade as Indicators of Factor Market Disruption," The Economic Record, The Economic Society of Australia, vol. 73(222), pages 233-247, September.
    2. Jayant Menon, 1996. "How Reliable are Intra-Industry Trade Measures as Indicators of Adjustment Costs?," Centre of Policy Studies/IMPACT Centre Working Papers g-119, Victoria University, Centre of Policy Studies/IMPACT Centre.
    3. Jayant Menon, 1994. "Trade Liberalization and Intra-Industry Specialization: The Australian Experience," Centre of Policy Studies/IMPACT Centre Working Papers g-107, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. M. A. B. Siddique & Srikanta Chatterjee, 2002. "The CER in Action: A Closer Look at Australia-NZ Trade Flows Since 1983," Economics Discussion / Working Papers 02-18, The University of Western Australia, Department of Economics.
    5. Vinko Zaninoviæ, 2022. "The intra-industry trade dynamics in CEE countries: The role of trade agreements," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 40(1), pages 129-145.
    6. Jayant Menon & Peter B. Dixon, 1995. "Regional Trading Arrangements and Intra-Industry Trade: The Case of ANZCERTA," Centre of Policy Studies/IMPACT Centre Working Papers g-114, Victoria University, Centre of Policy Studies/IMPACT Centre.
    7. Jayanthakumaran, Kankesu, 2004. "An Empirical Assessment of the Impact of Intra-Industry Trade on Employment: Australia 1989/90-2000/01," Economics Working Papers wp04-11, School of Economics, University of Wollongong, NSW, Australia.

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