IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-00270504.html
   My bibliography  Save this paper

A Systematic Decomposition of World Trade into Horizontal and Vertical IIT

Author

Listed:
  • Lionel Fontagné

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)

  • Michael Freudenberg

    (ITC (UNCTAD-WTO) - International Trade Center - WTO - UNCTAD)

  • Guillaume Gaulier

    (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)

Abstract

We provide a systematic decomposition of world trade using harmonized bilateral flows at the most available detail (some 5,000 product categories), into three trade types: inter-industry, intra-industry in horizontally and in vertically differentiated products. The analysis is diachronic and considers country pairs such as France-Germany, United States-China, Malaysia-Singapore, or India-Nigeria. We show that the increase in IIT at the world level is due to two-way trade of vertically differentiated products. We find France and Germany having the highest share of IIT in their bilateral trade among all country pairs in the world. In value terms, the most important bilateral IIT is between the United States and Canada. Recently, specialization according to the classical theories of international trade (inter-industry trade), has recovered, due to the increasing participation of emerging economies in world trade.

Suggested Citation

  • Lionel Fontagné & Michael Freudenberg & Guillaume Gaulier, 2006. "A Systematic Decomposition of World Trade into Horizontal and Vertical IIT," Post-Print hal-00270504, HAL.
  • Handle: RePEc:hal:journl:hal-00270504
    DOI: 10.1007/s10290-006-0076-6
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gabszewicz, J. & Turrini, A., 2000. "Workers' skills, product quality and industry equilibrium," International Journal of Industrial Organization, Elsevier, vol. 18(4), pages 575-593, May.
    2. Gabszewicz, Jean Jaskold, et al, 1981. "International Trade in Differentiated Products," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(3), pages 527-534, October.
    3. Lionel Fontagné & Michaël Freudenberg, 1997. "Intra-Industry Trade: Methodological Issues Reconsidered," Working Papers 1997-01, CEPII research center.
    4. Gaulier, Guillaume & Zignago, Soledad, 2004. "Notes on BACI (analytical database of international trade). 1989-2002 version," MPRA Paper 32401, University Library of Munich, Germany.
    5. David Greenaway & Robert Hine & Chris Milner, 1994. "Country-specific factors and the pattern of horizontal and vertical intra-industry trade in the UK," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(1), pages 77-100, March.
    6. P. J. Lloyd & Hyun-Hoon Lee (ed.), 2002. "Frontiers of Research in Intra-Industry Trade," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28598-9, March.
    7. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    8. Lionel Fontagné & Michael Freudenberg, 1999. "Endogenous Symmetry of Shocks in a Monetary Union," Open Economies Review, Springer, vol. 10(3), pages 263-287, July.
    9. Falvey, Rodney E., 1981. "Commercial policy and intra-industry trade," Journal of International Economics, Elsevier, vol. 11(4), pages 495-511, November.
    10. Kamal Abd-el-Rahman, 1991. "Firms’ competitive and national comparative advantages as joint determinants of trade composition," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(1), pages 83-97, March.
    11. Ecochard, Pierre & Fontagné, Lionel & Gaulier, Guillaume & Zignago, Soledad, 2005. "Intra-industry trade and regional integration," MPRA Paper 44182, University Library of Munich, Germany.
    12. Lancaster, Kelvin, 1980. "Intra-industry trade under perfect monopolistic competition," Journal of International Economics, Elsevier, vol. 10(2), pages 151-175, May.
    13. Fontagné, Lionel & Freudenberg, Michael & Péridy, Nicolas, 1998. "Intra-Industry Trade and the Single Market: Quality Matters," CEPR Discussion Papers 1959, C.E.P.R. Discussion Papers.
    14. Finger, J M, 1975. "Trade Overlap and Intra-Industry Trade," Economic Inquiry, Western Economic Association International, vol. 13(4), pages 581-589, December.
    15. 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 1505-1518, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lionel Fontagné & Michael Freudenberg & Guillaume Gaulier, 2005. "Disentangling Horizontal and Vertical Intra-Industry Trade," Working Papers 2005-10, CEPII research center.
    2. Fertő, Imre, 2006. "Vertikálisan és horizontálisan differenciált, ágazaton belüli kereskedelem az Európai Unió tejpiacán [Trade within vertically and horizontally differentiated industries on the milk market of the Eu," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 526-539.
    3. Levkovych, Inna, 2011. "Der ukrainische Außenhandel mit Produkten der Agrar- und Ernährungswirtschaft: Eine quantitative Analyse aus Sicht traditioneller und neuer Außenhandelstheorien," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 59, number 109520.
    4. Ando, Mitsuyo, 2006. "Fragmentation and vertical intra-industry trade in East Asia," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 257-281, December.
    5. Jean-Jacques Nowak & Sylvain Petit & Mondher Sahli, 2012. "Intra-Tourism Trade in Europe," Tourism Economics, , vol. 18(6), pages 1287-1311, December.
    6. Frahan, Bruno Henry de & Tharakan, Joe, 1998. "Horizontal And Vertical Intra-Industry Trade In The Processed Food Sector," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20903, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Michaël Freudenberg & Françoise Lemoine, 1999. "Central and Eastern European Countries in the International Division of Labour in Europe," Working Papers 1999-05, CEPII research center.
    8. AZHAR, Abdul K.M. & Elliott, Robert J.R. & Liu, Junting, 2008. "On the measurement of product quality in intra-industry trade: An empirical test for China," China Economic Review, Elsevier, vol. 19(2), pages 336-344, June.
    9. Isabel Proença & Horácio Faustino, 2015. "Modelling bilateral intra-industry trade indexes with panel data: a semiparametric approach," Computational Statistics, Springer, vol. 30(3), pages 865-884, September.
    10. L. G. Burange & Hemangi K. Kelkar, 2019. "Product Quality Index: A New Way to Classify Intra-industry Trade," Foreign Trade Review, , vol. 54(4), pages 408-421, November.
    11. Ecochard, Pierre & Fontagné, Lionel & Gaulier, Guillaume & Zignago, Soledad, 2005. "Intra-industry trade and regional integration," MPRA Paper 44182, University Library of Munich, Germany.
    12. Hoang, Viet, 2019. "The Dynamics of Agricultural Intra-Industry Trade: A Comprehensive Case Study in Vietnam," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 74-82.
    13. Vogiatzoglou, Klimis, 2005. "Varieties or Qualities? Horizontal and Vertical Intra-industry Trade within the NAFTA Trade Bloc," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 6(2), pages 1-13.
    14. Carolina Caicedo Marulanda & Jhon James Mora Rodríguez, 2011. "Comercio intraindustrial Colombia-Estados Unidos. El caso de los bienes altamente tecnológicos," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, June.
    15. Mónica Rivera, 2014. "Trade patterns in the process of European integration: Evidence for the intraindustrial exchanges of a Mediterranean peripheral region," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 227-249, January.
    16. Pittiglio, Rosanna, 2009. "The Intra-industry Trade for a Highincome Country: New Empirical Evidence for Italy," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 62(2), pages 233-254.
    17. Dutta, Sourish, 2022. "Two Approaches of Measuring Intra-industry Trade," EconStor Preprints 259000, ZBW - Leibniz Information Centre for Economics.
    18. Sourish Dutta, 2022. "Measuring Horizontal and Vertical Differentiation in Intra-industry Trade," Working Papers hal-03683580, HAL.
    19. Imre Fertő & Szilárd Podruzsik & Jeremiás Balogh, 2016. "Intra-industry trade in the wine sector in the enlarged European Union," Review of Agricultural, Food and Environmental Studies, Springer, vol. 97(3), pages 159-172, November.
    20. Aggarwal, Sakshi & Chakraborty, Debashis, 2017. "Determinants of India’s Bilateral Intra-Industry Trade over 2001-15: Empirical Results," MPRA Paper 78020, University Library of Munich, Germany.

    More about this item

    Keywords

    Intra-industry trade; international trade;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-00270504. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.