Determinants of Intra-Industry Trade between East and West Europe
The share of intra-industry trade (IIT) in total trade between Central and East European nations and the EU is among the highest of all the EU’s bilateral trade flows. IIT is broken down into horizontal and vertical components and the determinants of each is investigated. Vertical IIT (exchange of similar goods of different quality) is found to account for 80-90% of total IIT and is positively associated with product differentiation, labour intensity of production, economies of scale, and foreign direct investment (FDI). Controlling for country effects, a statistically significant positive association is found between horizontal IIT (the exchange of close substitutes of similar quality) and FDI, product differentiation, and industry concentration; a significant negative relationship is found for scale and labour intensity. These results do not hold if country effects are not controlled for, suggesting that country-specific factors are key determinants of horizontal IIT. The estimation results are more robust than those in previous studies, reflecting the specific characteristics of the endowments of, and ongoing restructuring process in, transition economies.
|Date of creation:||Oct 1997|
|Date of revision:|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-73, October.
- Balassa, Bela & Bauwens, Luc, 1987. "Intra-industry Specialisation in a Multi-country and Multi-industry Framework," Economic Journal, Royal Economic Society, vol. 97(388), pages 923-39, December.
- James R. Markusen & Anthony J. Venables, 1996.
"The Theory of Endowment, Intra-Industry, and Multinational Trade,"
NBER Working Papers
5529, National Bureau of Economic Research, Inc.
- Markusen, James R. & Venables, Anthony J., 2000. "The theory of endowment, intra-industry and multi-national trade," Journal of International Economics, Elsevier, vol. 52(2), pages 209-234, December.
- Markusen, James R. & Venables, Anthony J, 1996. "The Theory of Endowment, Intra-Industry and Multinational Trade," CEPR Discussion Papers 1341, C.E.P.R. Discussion Papers.
- Bergstrand, Jeffrey H, 1990. "The Heckscher-Ohlin-Samuelson Model, the Linder Hypothesis and the Determinants of Bilateral Intra-industry Trade," Economic Journal, Royal Economic Society, vol. 100(403), pages 1216-29, December.
- Edward E. Leamer, 1992. "Testing Trade Theory," NBER Working Papers 3957, National Bureau of Economic Research, Inc.
- Damien NEVEN, 1994.
"Trade Liberalisation with Eastern Nations. How Sensitive ?,"
Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP)
9407, Université de Lausanne, Faculté des HEC, DEEP.
- Neven, Damien J, 1994. "Trade Liberalization with Eastern Nations. How Sensitive?," CEPR Discussion Papers 1000, C.E.P.R. Discussion Papers.
- Lancaster, Kelvin, 1980. "Intra-industry trade under perfect monopolistic competition," Journal of International Economics, Elsevier, vol. 10(2), pages 151-175, May.
- Falvey, Rodney E., 1981. "Commercial policy and intra-industry trade," Journal of International Economics, Elsevier, vol. 11(4), pages 495-511, November.
- Alan Deardorff, 1998.
"Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?,"
in: The Regionalization of the World Economy, pages 7-32
National Bureau of Economic Research, Inc.
- Alan V. Deardorff, 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Working Papers 5377, National Bureau of Economic Research, Inc.
- Deardorff, A.V., 1995. "Determinants of Bilateral Trade : Does Gravity Work in a Neoclassical World?," Papers 95-05, Michigan - Center for Research on Economic & Social Theory.
- David Greenaway & Chris Milner & Robert Elliott,, . "UK Intra-Industry Trade with EU North and South: A Multi-Country and Multi-Industry Analysis," Discussion Papers 96/9, University of Nottingham, CREDIT.
- Lionel Fontagné & Michaël Freudenberg & Nicolas Peridy, 1997. "Trade Patterns Inside the Single Market," Working Papers 1997-07, CEPII research center.
- Harrigan, James, 1995. "The Volume of Trade in Differentiated Intermediate Goods: Theory and Evidence," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 283-93, May.
- 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.
- 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.
- Deardoff, A.V., 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," Working Papers 382, Research Seminar in International Economics, University of Michigan.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:1721. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.