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The impact of immigration on Portuguese Intra-Industry Trade

Author

Listed:
  • Carlos Leitão , Nuno

    (Polytechnic Institute of Santarém, & Member at CEFGAGE, University of Èvora, Portugal)

Abstract

This paper investigates the relationship between intra-industry trade (IIT) and immigration flows using a gravity model for the period 2000-2010 between Portugal and European Union’s Member States (EU-27). The present study uses the methodology of Kandogan (2003) for separating IIT into its components horizontal (HIIT) and vertical intra-industry trade (VIIT).Using a panel data approach, our study find that immigration has a positive influence on Portuguese intra-industry trade. These results indicate that the immigration can reduce transaction costs between home and host country. We also consider in econometric model, the economic dimension which appears to exercise a positive effect on IIT. Our results confirm the hypothesis that there is a negative effect of transportation costs on trade.

Suggested Citation

  • Carlos Leitão , Nuno, 2013. "The impact of immigration on Portuguese Intra-Industry Trade," European Economic Letters, European Economics Letters Group, vol. 2(1), pages 7-11.
  • Handle: RePEc:ris:eueclt:0007
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    More about this item

    Keywords

    Gravity model; Horizontal and Vertical Intra-industry trade; Immigration; Panel Data;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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