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New Aspects of Intra-Industry trade: Evidence from EU-15 countries

Author

Listed:
  • Tadashi Ito

    (Okinawa University, Japan)

  • Toshihiro Okubo

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This paper argues about some missing aspects of intra-industry trade (IIT) and proposes some alternative measures to better capture the nature of IIT. We show the over-time evolution of the number of IIT products, and propose an index which captures the share of the number of IIT products over the number of all traded goods. We also show how arbitrary the conventional classification into Horizontal and Vertical IIT indices are, and then propose a new measure using the unit value difference of IIT products. To discuss these issues we use trade data at HS 8 digit product level of EU 15 countries for the period 1988-2007, mainly within EU countries as well as with Eastern European countries, and with China as major EU trading partners. Our findings include the Eastern European countries' rise up the quality ladder, and the substantially lower prices of China's exports to EU 15 countries vis-à-vis China's imports from them, whose gap is not narrowing even in very recent years.

Suggested Citation

  • Tadashi Ito & Toshihiro Okubo, 2011. "New Aspects of Intra-Industry trade: Evidence from EU-15 countries," Discussion Paper Series DP2011-02, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:dp2011-02
    as

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    File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2011-02.pdf
    File Function: First version, 2011
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    References listed on IDEAS

    as
    1. Fukao, Kyoji & Ishido, Hikari & Ito, Keiko, 2003. "Vertical intra-industry trade and foreign direct investment in East Asia," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 468-506, December.
    2. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    3. Lionel Fontagné & Michaël Freudenberg, 1997. "Intra-Industry Trade: Methodological Issues Reconsidered," Working Papers 1997-01, CEPII research center.
    4. Juliette Milgram-Baleix & Ana I. Moro-Egido, 2010. "The Asymmetric Effect of Endowments on Vertical Intra-industrial Trade," The World Economy, Wiley Blackwell, vol. 33(5), pages 746-777, May.
    5. Abdul K. M. Azhar & Robert J. R. Elliott, 2006. "On the Measurement of Product Quality in Intra-Industry Trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 476-495, October.
    6. 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.
    7. Lionel Fontagné & Michaël Freudenberg & Nicolas Peridy, 1997. "Trade Patterns Inside the Single Market," Working Papers 1997-07, CEPII research center.
    8. Peter K. Schott, 2008. "The relative sophistication of Chinese exports," Economic Policy, CEPR;CES;MSH, vol. 23, pages 5-49, January.
    9. Marius Brülhart & Robert Elliott, 2002. "Labour-market effects of intra-industry trade: Evidence for the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(2), pages 207-228, June.
    10. 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.
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    Citations

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    Cited by:

    1. Joanna Kuczewska & Maciej Krzeminski, 2011. "Regional constructed advantages – case of Pomeranian Region in Poland," Working Papers of Economics of European Integration Division 1105, The Univeristy of Gdansk, Faculty of Economics, Economics of European Integration Division.
    2. Christian Ragacs & Beate Resch & Klaus Vondra, 2011. "Austria’s Manufacturing Competitiveness," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 35-61.
    3. repec:bla:etrans:v:25:y:2017:i:4:p:625-662 is not listed on IDEAS
    4. Tomasz Brodzicki, 2011. "Handel zagraniczny panstw Grupy Wyszehradzkiej. Zmiany strukturalne i rola handlu wewnatrzgaleziowego," Working Papers of Economics of European Integration Division 1104, The Univeristy of Gdansk, Faculty of Economics, Economics of European Integration Division.

    More about this item

    Keywords

    Intra-industry trade; Horizontal and Vertical Product Differentiation; Quality; Unit price gap;

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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