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Determinants of Vertical Intra-Industry Trade in the Automobile Manufacturing Sector: globalization and fragmentation

Author

Listed:
  • Nuno Leitão
  • Horácio Faustino
  • Yushi Yoshida

Abstract

This paper examines the determinants of vertical intra-industry trade (VIIT) in the automobile components industry between Portugal and the European Union 27 (EU-27) and the BRIC countries (Brazil, Russia, India and China) during the period 1995-2006. Using a static and a dynamic panel data analysis, the results indicate that VIIT is a positive function of the difference in per-capita GDP between Portugal and its trading partners. Moreover, there is statistical evidence that geographical distance and proximity shared border influence this type of VIIT. Our results also confirm the hypothesis that trade increases if the transportation costs decrease and that there is a positive correlation between differences in endowments and VIIT.

Suggested Citation

  • Nuno Leitão & Horácio Faustino & Yushi Yoshida, 2009. "Determinants of Vertical Intra-Industry Trade in the Automobile Manufacturing Sector: globalization and fragmentation," Working Papers Department of Economics 2009/06, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
  • Handle: RePEc:ise:isegwp:wp62009
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    File URL: http://pascal.iseg.utl.pt/~depeco/wp/wp062009.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    VIIT; intermediate goods; automobile manufacturing industry; panel data; fragmentation; globalization.;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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