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The nature and causes of intra-industry trade: Back to the comparative advantage explanation? The case of Spain

  • José Blanes
  • Carmela Martín

The aim of this paper is to contribute empirically to the knowledge of the nature and causes of intra-industry trade (IIT), distinguishing between vertical and horizontal IIT. To this end, we estimate a more general empirical model than those used in previous studies, by introducing simultaneously both national and industry-specific variables which include measures for human and technological capital endowments. The results show that vertical IIT is positively related with industry technological intensity and differences in human and technological capital endowments between countries. On the other hand, horizontal IIT is explained by the traditional monopolistic competition model.

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Article provided by Springer in its journal Weltwirtschaftliches Archiv.

Volume (Year): 136 (2000)
Issue (Month): 3 (09)
Pages: 423-441

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Handle: RePEc:spr:weltar:v:136:y:2000:i:3:p:423-441
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  1. Markusen, James R., 1984. "Multinationals, multi-plant economies, and the gains from trade," Journal of International Economics, Elsevier, vol. 16(3-4), pages 205-226, May.
  2. Helpman, Elhanan, 1985. "Multinational Corporations and Trade Structure," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 443-57, July.
  3. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
  4. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
  5. Motta, Massimo, 1994. "International trade and investments in a vertically differentiated industry," International Journal of Industrial Organization, Elsevier, vol. 12(2), pages 179-196, June.
  6. Greenaway, David & Hine, Robert C & Milner, Chris, 1995. "Vertical and Horizontal Intra-industry Trade: A Cross Industry Analysis for the United Kingdom," Economic Journal, Royal Economic Society, vol. 105(433), pages 1505-18, November.
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  9. Ernesto Somma, 1994. "Intra-industry trade in the European computers industry," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(4), pages 784-799, December.
  10. 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.
  11. Harrigan, James, 1999. "Estimation of cross-country differences in industry production functions," Journal of International Economics, Elsevier, vol. 47(2), pages 267-293, April.
  12. Davis, Donald R., 1995. "Intra-industry trade: A Heckscher-Ohlin-Ricardo approach," Journal of International Economics, Elsevier, vol. 39(3-4), pages 201-226, November.
  13. Caves, Richard E, 1981. "Intra-Industry Trade and Market Structure in the Industrial Countries," Oxford Economic Papers, Oxford University Press, vol. 33(2), pages 203-23, July.
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  15. Motta, Massimo, 1992. "Sunk Costs and Trade Liberalisation," Economic Journal, Royal Economic Society, vol. 102(412), pages 578-87, May.
  16. Kamal Abd-el-Rahman, 1991. "Firms’ competitive and national comparative advantages as joint determinants of trade composition," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 127(1), pages 83-97, March.
  17. Elhanan Helpman, 1998. "Explaining the structure of foreign trade: Where do we stand?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 134(4), pages 573-589, December.
  18. Benhabib, J. & Spiegel, M.M., 1992. "The Role of Human Capital and Political Instability in Economic Development," Working Papers 92-24, C.V. Starr Center for Applied Economics, New York University.
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