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Economic Geography, Comparative Advantage and Trade within Industries: Evidence from the OECD

  • Greenaway, David

    ()

    (CREDIT, University of Nottingham)

  • Torstensson, Johan

    (Lund University and FIEF)

A large share of world trade, especially among the OECD countries, is two-way trade within industries, so called intra-industry trade. Despite this, few attempts have been made to examine why countries export some products within industries, whereas they import others. We examine this issue, by means of regression analysis, by examining the shares of IIT that are vertical and horizontal and by examining price dispersion. The regression results suggest that an abundant human capital endowment as well as a large domestic market increases the quality of OECD-countries´ manufacturing exports, thus offering support for comparative advantage models as well as newer geography models. But, human capital becomes an increasingly important determinant of quality over time.

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Paper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number 144.

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Length: 24 pages
Date of creation: 22 Jul 1997
Date of revision:
Handle: RePEc:hhs:fiefwp:0144
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  6. 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, vol. 130(1), pages 77-100, March.
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  13. David Greenaway & Johan Torstensson,, . "Back to the Future: Taking Stock on Intra-Industry Trade," Discussion Papers 96/14, University of Nottingham, CREDIT.
  14. Hanson, Gordon H, 1997. "Increasing Returns, Trade and the Regional Structure of Wages," Economic Journal, Royal Economic Society, vol. 107(440), pages 113-33, January.
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  22. Johan Torstensson, 1991. "Quality differentiation and factor proportions in international trade: An empirical test of the Swedish case," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 127(1), pages 183-194, March.
  23. Klepper, Steven & Leamer, Edward E, 1984. "Consistent Sets of Estimates for Regressions with Errors in All Variables," Econometrica, Econometric Society, vol. 52(1), pages 163-83, January.
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  25. Davis, Donald R., 1995. "Intra-industry trade: A Heckscher-Ohlin-Ricardo approach," Journal of International Economics, Elsevier, vol. 39(3-4), pages 201-226, November.
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