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The Intra-Industry Trade of the Czech Republic in the Economic Transition

  • KAREL JANDA
  • DANIEL MÜNICH

In this paper, we provide an overview of the development of Czech trade and its structure and investigate the nature of Czech intra-industry trade (IIT) and its labor market determinants. We evaluate the evolution of the Czech trade in the context of other transition economies--the Central European Free Trade Agreement (CEFTA) countries, the Baltic countries, and the Commonwealth of Independent States (CIS). In our analysis, we use decomposition of IIT into vertical and horizontal components. The Czech Grubel-Lloyd index (GLI) of 75 percent at the SITC two-digit level is still somehow lower than the values for comparable EU countries, but this difference is not high. This indicates a relatively high level of Czech integration into European and world economies. This result is supported by the comparison of IIT in the trade between the European Union and seven European transition economies undertaken by Fidrmuc (2000), showing that the Czech Republic has the highest IIT out of all these countries. Also, the structure of Czech IIT with respect to its horizontal and vertical elements is comparable with the structure of IIT in EU countries. The results of our cross-industry analysis of labor market determinants of IIT show that qualitative characteristics of the labor force are statistically significant predictors for IIT after controlling for time changes and character of industry.

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Article provided by M.E. Sharpe, Inc. in its journal Emerging Markets Finance and Trade.

Volume (Year): 40 (2004)
Issue (Month): 2 (March)
Pages: 27-50

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Handle: RePEc:mes:emfitr:v:40:y:2004:i:2:p:27-50
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  1. David Greenaway & Robert Hine & Chris Milner, 1994. "Country-specific factors and the pattern of horizontal and vertical intra-industry trade in the UK," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(1), pages 77-100, March.
  2. Imre Ferto & Lionel J. Hubbard, 2002. "Intra-industry trade in horizontally and vertically differentiated agrifood products between Hungary and the EU," IEHAS Discussion Papers 0202, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  3. Jarko Fidrmuc & Daniela Grozea-Helmenstein & Andreas Wörgötter, 1999. "East-west intra-industry trade dynamics," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 135(2), pages 332-346, June.
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  5. Fidrmuc, Jarko & Fidrmuc, Jan, 2001. "Disintegration and trade," ZEI Working Papers B 24-2001, ZEI - Center for European Integration Studies, University of Bonn.
  6. Eva Zamrazilová & Liana Payson, 2000. "External Imbalance: The Czech Case," Eastern European Economics, M.E. Sharpe, Inc., vol. 38(3), pages 82-94, June.
  7. Jarko Fidrmuc, 2000. "Restructuring European union trade with central and eastern European countries," Atlantic Economic Journal, International Atlantic Economic Society, vol. 28(1), pages 83-92, March.
  8. Karel Janda & Daniel Münich, 2002. "The czech intra-industry trade and its labor market determinants," Politická ekonomie, University of Economics, Prague, vol. 2002(2).
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  10. 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.
  11. José Blanes & Carmela Martín, 2000. "The nature and causes of intra-industry trade: Back to the comparative advantage explanation? The case of Spain," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 136(3), pages 423-441, 09.
  12. Vladimír Tomšík & Eva Zamrazilová, 2000. "Czech foreign trade in the nineties: adaptation to developed markets," Prague Economic Papers, University of Economics, Prague, vol. 2000(4).
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