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The Geography of Intra-Industry Trade: Empirics


  • Rice, Patricia
  • Stewart, Martin
  • Venables, Anthony J


This Paper uses bilateral trade data for OECD countries at the 3-digit industry level to investigate the geography of intra-industry trade (IIT). IIT diminishes with distance and much of the existing empirical literature suggests that this is an inherent characteristic of such trade, arguing that trade in sectors intensive in IIT is choked off rapidly by distance. We show that the dependence of IIT on geography arises not because of any inherent feature of the effects of distance on such trade, but because of the spatial structure of countries’ supply and demand characteristics; close countries do a lot of IIT because they have similar economic structures.

Suggested Citation

  • Rice, Patricia & Stewart, Martin & Venables, Anthony J, 2002. "The Geography of Intra-Industry Trade: Empirics," CEPR Discussion Papers 3368, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3368

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    References listed on IDEAS

    1. Balassa, Bela, 1986. "Intra-Industry specialization : A cross-country analysis," European Economic Review, Elsevier, vol. 30(1), pages 27-42, February.
    2. Rudolf Loertscher & Frank Wolter, 1980. "Determinants of intra-industry trade: Among countries and across industries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(2), pages 280-293, June.
    3. Bela Balassa & Luc Bauwens, 1988. "Inter-industry and intra-industry specialization in manufactured goods," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 124(1), pages 1-13, March.
    4. Redding, Stephen & Venables, Anthony J., 2004. "Economic geography and international inequality," Journal of International Economics, Elsevier, vol. 62(1), pages 53-82, January.
    5. Joe Stone & Hyun-Hoon Lee, 1995. "Determinants of intra-industry trade: A longitudinal, cross-country analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 131(1), pages 67-85, March.
    6. David Hummels & James Levinsohn, 1995. "Monopolistic Competition and International Trade: Reconsidering the Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 799-836.
    7. Balassa, Bela & Bauwens, Luc, 1988. "The determinants of intra-European trade in manufactured goods," European Economic Review, Elsevier, vol. 32(7), pages 1421-1437, September.
    8. Claudy Culem & Lars Lundberg, 1986. "The product pattern of intra-industry trade: Stability among countries and over time," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 122(1), pages 113-130, March.
    9. 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 923-939, December.
    10. Emilio Pagoulatos & Robert Sorensen, 1975. "Two-way International trade: An econometric analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 111(3), pages 454-465, September.
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    Cited by:

    1. 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.
    2. Helena Marques & Hugh Metcalf, 2005. "What Determines Sectoral Trade in the Enlarged EU?," Review of Development Economics, Wiley Blackwell, vol. 9(2), pages 197-231, May.
    3. repec:kap:iaecre:v:14:y:2008:i:4:p:355-368 is not listed on IDEAS
    4. Kyoji Fukao; Toshihiro Okubo, 2004. "Why Has the Border Effect in the Japanese Market Declined?," IHEID Working Papers 12-2004, Economics Section, The Graduate Institute of International Studies.
    5. Toshihiro Okubo, 2004. "Intra-industry Trade and Production Networks," IHEID Working Papers 13-2004, Economics Section, The Graduate Institute of International Studies.
    6. Julie Regolo, 2013. "Export Diversification: How Much Does the Choice of the Trading Partner Matter?," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 13072, Institut d'Economie et Econométrie, Université de Genève.
    7. Aleksandra Riedl & Silvia Rocha-Akis, 2007. "Testing the tax competition theory: How elastic are national tax bases in western Europe?," Department of Economics Working Papers wuwp112, Vienna University of Economics and Business, Department of Economics.
    8. Kwanho Shin & Yunjong Wang, 2003. "Trade Integration and Business Cycle Synchronization in East Asia," Asian Economic Papers, MIT Press, vol. 2(3), pages 1-20.
    9. repec:eee:jeeman:v:83:y:2017:i:c:p:50-67 is not listed on IDEAS
    10. Dimitri Mardas & Chistos Nikas, 2008. "European Integration, Intra-industry Trade in Vertically Differentiated Products and the Balkan Countries," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 14(4), pages 355-368, November.
    11. Regolo, Julie, 2013. "Export diversification: How much does the choice of the trading partner matter?," Journal of International Economics, Elsevier, vol. 91(2), pages 329-342.
    12. Marius Brülhart, 2009. "An Account of Global Intra-industry Trade, 1962-2006," The World Economy, Wiley Blackwell, vol. 32(3), pages 401-459, March.
    13. Károly Attila SOÓS, 2013. "The Role of Intra-Industry Trade in the Industrial Upgrading of the 10 CEECs New Members of the European Union," KIER Working Papers 868, Kyoto University, Institute of Economic Research.
    14. Kwanho Shin & Yunjong Wang, 2003. "Monetary Integration Ahead of Trade Integration in East Asia?," ISER Discussion Paper 0572, Institute of Social and Economic Research, Osaka University.
    15. Roy, Jayjit, 2017. "On the environmental consequences of intra-industry trade," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 50-67.

    More about this item


    geography; intra-industry trade; trade structure; transport costs;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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