Intra-Industry Trade and Development: Revisiting Theory, Measurement and New Evidences
In this paper, role of international trade in economic development is discussed, both from the perspective of theoretical development and empiricism. In particular, it revisits theories pertaining to intra-industry and inter-industry trade and presents evidences of resilience in intra-industry trade. With globalization, trade in technology-intensive and manufactured products has increased intra-industry trade. Review of the theoretical and empirical literature reveals that this kind of trade is explained by variations in taste patterns, diversified preference structure, scale economies, technological change, and income level, amongst other things. After discussing computational issues related to level of aggregation of industry for measuring the extent of such trade, using Global Trade Analysis Project's (GTAP) database, we provide recent measures of Grubel-Lloyd Intra-industry trade indexes for the world economies. It shows that a country's intra-industry trade is growing in volume especially with fragmentation of production process. Also, we observe that burgeoning volume of intra-industry trade is positively correlated with: (i) per capita GNP; (ii) trade integration; (iii) share of manufacturing exports in total exports; (iv) technology intensiveness of the production process; (v) variety-seeking demand patterns.
|Date of creation:||01 May 2007|
|Date of revision:||01 Sep 2008|
|Publication status:||Published in Indian Journal of Economics and Business 1.8(2009): pp. 79-115|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-53, February.
- Balassa, Bela & Bauwens, Luc, 1988. "The determinants of intra-European trade in manufactured goods," European Economic Review, Elsevier, vol. 32(7), pages 1421-1437, September.
- Helpman, Elhanan & Grossman, Gene M., 1989.
"Product Development and International Trade,"
3445094, Harvard University Department of Economics.
- Grossman, G.M. & Helpman, E., 1988. "Product Development And International Trade," Papers 132, Princeton, Woodrow Wilson School - Public and International Affairs.
- Gene M. Grossman & Elhanan Helpman, 1988. "Product Development and International Trade," NBER Working Papers 2540, National Bureau of Economic Research, Inc.
- Markusen, James R & Wigle, Randall M, 1990. "Explaining the Volume of North-South Trade," Economic Journal, Royal Economic Society, vol. 100(403), pages 1206-15, December.
- repec:dgr:vuarem:1987-30 is not listed on IDEAS
- repec:ner:tilbur:urn:nbn:nl:ui:12-176642 is not listed on IDEAS
- Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
- Ethier, Wilfred, 1979. "Internationally decreasing costs and world trade," Journal of International Economics, Elsevier, vol. 9(1), pages 1-24, February.
- Panagariya, Arvind, 1981. "Quantitative restrictions in international trade under monopoly," Journal of International Economics, Elsevier, vol. 11(1), pages 15-31, February.
- Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
- Lancaster, Kelvin, 1980. "Intra-industry trade under perfect monopolistic competition," Journal of International Economics, Elsevier, vol. 10(2), pages 151-175, May.
- Carnoy, Martin, 1970. "A Welfare Analysis of Latin American Economic Union: Six Industry Studies," Journal of Political Economy, University of Chicago Press, vol. 78(4), pages 626-54, Part I, J.
- Lewis, Arthur, 1979.
"The Slowing Down of the Engine of Growth,"
Nobel Prize in Economics documents
1979-2, Nobel Prize Committee.
- Venables, Anthony J., 1982. "Optimal tariffs for trade in monopolistically competitive commodities," Journal of International Economics, Elsevier, vol. 12(3-4), pages 225-241, May.
- Sarkar, Prabirjit & Singer, H. W., 1991. "Manufactured exports of developing countries and their terms of trade since 1965," World Development, Elsevier, vol. 19(4), pages 333-340, April.
- Glejser, H. & Goossens, K. & Vanden Eede, M., 1982. "Inter-industry versus intra-industry specialization in exports and imports (1959-1970-1973)," Journal of International Economics, Elsevier, vol. 12(3-4), pages 363-369, May.
- Cox, David & Harris, Richard, 1985.
"Trade Liberalization and Industrial Organization: Some Estimates for Canada,"
Journal of Political Economy,
University of Chicago Press, vol. 93(1), pages 115-45, February.
- David Cox & Richard Harris, 1983. "Trade Liberalization and Industrial Organization: Some Estimates for Canada," Working Papers 523, Queen's University, Department of Economics.
- Krugman, Paul R, 1987. "Is Free Trade Passe?," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 131-44, Fall.
- Hong Hwang, 1984. "Intra-Industry Trade and Oligopoly: A Conjectural Variations Approach," Canadian Journal of Economics, Canadian Economics Association, vol. 17(1), pages 126-37, February.
- Finger, J M, 1975. "Trade Overlap and Intra-Industry Trade," Economic Inquiry, Western Economic Association International, vol. 13(4), pages 581-89, December.
- Lars Lundberg, 1982. "Intra-industry trade : The case of Sweden," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 118(2), pages 302-316, June.
- Young, Leslie, 1991. "Heckscher-Ohlin trade theory with variable returns to scale," Journal of International Economics, Elsevier, vol. 31(1-2), pages 183-190, August.
- Havrylyshyn, Oli, 1985. "The direction of developing country trade : Empirical evidence of differences between South-South and South-North trade," Journal of Development Economics, Elsevier, vol. 19(3), pages 255-281, December.
- Kol, Jacob & Mennes, Loet B. M., 1986. "Intra-industry specialization: Some observations on concepts and measurement," Journal of International Economics, Elsevier, vol. 21(1-2), pages 173-181, August.
- Lancaster, Kelvin, 1991. "The 'product variety' case for protection," Journal of International Economics, Elsevier, vol. 31(1-2), pages 1-26, August.
- 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.
- Sanyal, Kalyan K & Jones, Ronald W, 1982. "The Theory of Trade in Middle Products," American Economic Review, American Economic Association, vol. 72(1), pages 16-31, March.
- de Melo, Jaime & Robinson, Sherman, 1981. "Trade Policy and Resource Allocation in the Presence of Product Differentiation," The Review of Economics and Statistics, MIT Press, vol. 63(2), pages 169-77, May.
- Lundberg, Lars, 1988. "The role of comparative costs for determining inter- and intra-industry trade with developing countries," European Economic Review, Elsevier, vol. 32(9), pages 1699-1710, November.
- Balassa, Bela, 1986. "Intra-Industry specialization : A cross-country analysis," European Economic Review, Elsevier, vol. 30(1), pages 27-42, February.
- Kiertisak Toh, 1982. "A cross-section analysis of intra-industry trade in U.S. manufacturing industries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 118(2), pages 281-301, June.
- Ocampo, JoseAntonio, 1986. "New developments in trade theory and LDCs," Journal of Development Economics, Elsevier, vol. 22(1), pages 129-170, June.
- James, Jeffrey & Steward, Frances, 1981. "New Products: A Discussion of the Welfare Effects of the Introduction of New Products in Developing Countries," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 81-107, March.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:37260. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.