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

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  • David Greenaway
  • Johan Torstensson,

Abstract

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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Suggested Citation

  • David Greenaway & Johan Torstensson,, "undated". "Economic Geography, Comparative Advantage and Trade Within Industries: Evidence from the OECD," Discussion Papers 97/16, University of Nottingham, CREDIT.
    • Handle: RePEc:not:notcre:97/16
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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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