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The Impact of Immigration on Portuguese Intra-Industry Trade

  • Nuno Carlos Leitão

    (Polytechnic Institute of Santarém and CEFGAGE, University of Èvora, Portugal)

This paper investigates the relationship between intra-industry trade (IIT) and immigration flows using a gravity model for the period 2000-2010 between Portugal and European Union’s Member States (EU-27). The present study uses the methodology of Kandogan (2003) for separating IIT into its components horizontal (HIIT) and vertical intra-industry trade (VIIT). Using a panel data approach, our study find that immigration has a positive influence on Portuguese intra-industry trade. These results indicate that the immigration can reduce transaction costs between home and host country. We also consider in econometric model, the economic dimension which appears to exercise a positive effect on IIT. Our results confirm the hypothesis that there is a negative effect of transportation costs on trade.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2013.20.

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Date of creation: Feb 2013
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Handle: RePEc:fem:femwpa:2013.20
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