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Demand patterns and vertical intra-industry trade with special reference to North-South trade


  • Joakim Gullstrand


Demand patterns have been considered important driving forces of intra-industry trade (IIT) ever since the emergence of IIT literature. The distribution of income within countries and per capita income differences between countries are regarded as major explanatory factors behind vertical IIT. This paper focuses on North-South trade, and we are particularly interested in the role of income distribution and per capita income as demand-side determinants of vertical IIT. We test hypotheses on differences in income distribution, differences in per capita income, and average market size in two different empirical approaches; an economy-wide, and a multi-industry approach. The results show evidence of the role of income distribution and per capita income, that there is an important interaction between these two variables, and that the average market size matters.

Suggested Citation

  • Joakim Gullstrand, 2001. "Demand patterns and vertical intra-industry trade with special reference to North-South trade," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 11(4), pages 429-455.
  • Handle: RePEc:taf:jitecd:v:11:y:2001:i:4:p:429-455 DOI: 10.1080/0963819022000014249

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    References listed on IDEAS

    1. Scheinkman, Jose A & LeBaron, Blake, 1989. "Nonlinear Dynamics and Stock Returns," The Journal of Business, University of Chicago Press, vol. 62(3), pages 311-337, July.
    2. Paul Grauwe & Hans Dewachter, 1993. "A chaotic model of the exchange rate: The role of fundamentalists and chartists," Open Economies Review, Springer, vol. 4(4), pages 351-379, December.
    3. De Grauwe, Paul & Dewachter, Hans, 1990. "A Chaotic Monetary Model of the Exchange Rate," CEPR Discussion Papers 466, C.E.P.R. Discussion Papers.
    4. Szpiro, George G., 1994. "Exchange rate speculation and chaos inducing intervention," Journal of Economic Behavior & Organization, Elsevier, vol. 24(3), pages 363-368, August.
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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. Lionel Fontagné & Michael Freudenberg & Guillaume Gaulier, 2005. "Disentangling Horizontal and Vertical Intra-Industry Trade," Working Papers 2005-10, CEPII research center.
    3. BELLINO, Antonella & CELI, Giuseppe, 2016. "The Migration-Trade Nexus in the Presence of Vertical and Horizontal Product Differentiation," CELPE Discussion Papers 137, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
    4. Lars Jensen & Teit Lüthje, 2009. "Driving forces of vertical intra-industry trade in Europe 1996–2005," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 469-488, October.
    5. Božić, Dragica & Nikolić, Marija M., 2013. "Regional Analysis of Agricultural and Food Trade of Serbia," 135th Seminar, August 28-30, 2013, Belgrade, Serbia 160374, European Association of Agricultural Economists.
    6. Imre Ferto & Károly Attila Soós, 2012. "Controversial issues in factors determining intra-industry trade," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 4(1/2), pages 132-148.


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