Intra-Industry Trade in Agricultural and Food Products: The Case of Ukraine
We present an analysis of agricultural and food trade in Ukraine over the period 1996-2002 focusing on different aspects of intra-industry trade. We estimated Grubel-Lloyd and marginal IIT indexes to examine the relevance of intra-industry trade between Ukraine and its trading partners and the changes in nature of trade flows over time. The results indicate that the major part of agro-food trade is of the inter-industry type, and thus a product of underlying comparative advantages. The low level of index seems to be typical for primary sectors in comparison to industries with higher product differentiation. Also marginal IIT appears to be low, the structure of the changes in agro-food trade flows between Ukraine and its trading partners during the analyzed period is shown to be predominantly intraindustry. These results imply that the restructuring process, associated with trade liberalization of Ukraine on bilateral and multilateral level, will induce higher adjustment costs than in an intra-industry trade environment.
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