Intra-industry Trade in an Enlarged Europe : Trend of Intra-industry Trade in the European Union and its Determinants
In this paper I examine the evolution of intra-industry trade (IIT) in intra-European trade in the period of accession of the Central and Eastern European countries (CEEC). In order to identify changes in IIT in intra-European trade, I calculate the Grubel and Lloyd index for the static dimension and Brulhart A index for the dynamic dimension. Based on Grubel and Lloyd index, I conduct gravity-type empirical tests to verify determinants of IIT at the intra-European level. I find that CEECs experienced considerable increase in IIT, particularly during transitional periods before their accession. However, the level of IIT between CEECs is still considerably low. Given that a trade-investment nexus exists to explain IIT in intra-European trade, IIT in CEECs can increase further, as they receive more FDI from their neighbors.
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- José Manuel Martins Caetano & Aurora Galego, 2006. "In Search for Determinants of Intra-Industry Trade within an Enlarged Europe," Economics Working Papers 2_2006, University of Évora, Department of Economics (Portugal).
- Lionel Fontagné & Michaël Freudenberg, 1997. "Intra-Industry Trade: Methodological Issues Reconsidered," Working Papers 1997-01, CEPII research center.
- Christophe Rault & Robert Sova & Ana Maria Sova, 2009.
"Modelling international trade flows between CEEC and OECD countries,"
Applied Economics Letters,
Taylor & Francis Journals, vol. 16(15), pages 1547-1554.
- Christophe Rault & Robert Sova & Ana Maria Sova, 2008. "Modeling International Trade Flows between CEEC and OECD Countries," CESifo Working Paper Series 2282, CESifo Group Munich.
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