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

  • Nuno Leitão
  • Horácio Faustino
  • Yushi Yoshida

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.

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File URL: http://pascal.iseg.utl.pt/~depeco/wp/wp062009.pdf
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Paper provided by ISEG - School of Economics and Management, Department of Economics, University of Lisbon in its series Working Papers Department of Economics with number 2009/06.

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Date of creation: Jan 2009
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Handle: RePEc:ise:isegwp:wp62009
Contact details of provider: Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Web page: https://aquila1.iseg.ulisboa.pt/aquila/departamentos/EC

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