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Intra-Industry Trade Development in the Baltic States

Author

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  • Grigori FainÅ¡tein
  • Aleksei NetÅ¡unajev

Abstract

This paper investigates intra-industry trade (IIT) dynamics for Estonia, Latvia, and Lithuania in 1999-2007. IIT is decomposed into its vertical and horizontal components based on differences in import and export unit values. Results show that shares of IIT have increased within the period, with vertical IIT dominating. Shares of total vertical and horizontal IIT have grown since 2004, the year of accession to the European Union. Using panel data analysis, we estimate three static models and a dynamic model of IIT determinants. We find market size to be important in the Baltic states for IIT in general and for horizontal IIT in particular. A negative relationship between distance and share of IIT is a standard finding. Among factor endowment variables, we find difference in human capital to be significant in explaining IIT.

Suggested Citation

  • Grigori FainÅ¡tein & Aleksei NetÅ¡unajev, 2011. "Intra-Industry Trade Development in the Baltic States," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 47(0), pages 95-110, July.
  • Handle: RePEc:mes:emfitr:v:47:y:2011:i:0:p:95-110
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    References listed on IDEAS

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    1. Lionel Fontagné & Michael Freudenberg & Guillaume Gaulier, 2006. "A Systematic Decomposition of World Trade into Horizontal and Vertical IIT," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 459-475, October.
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    Cited by:

    1. Valerija Botrić, 2013. "Determinants of Intra-industry Trade between Western Balkans and EU-15: Evidence from Bilateral Data," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 6(2), pages 7-23, September.
    2. Jámbor, Attila, 2014. "A horizontális és vertikális ágazaton belüli agrárkereskedelem meghatározó tényezői az EU új tagországaiban
      [Determinants of horizontal and vertical intra-industry agri-food trade in the new EU mem
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 544-565.

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