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Globalization and United States’ Intra-Industry Trade

  • Leitão, Nuno Carlos

The recent trend of globalization has given rise to a new paradigm in international economics, i.e. the simultaneous exports and imports of a product within country or a particular industry called intra-industry trade (IIT) or two-way trade. This study examines country-levels determinants of intra-industry trade, in U.S. trade. The manuscript applies a static and dynamic panel data approach. In contrast to previous studies, this paper used a dynamic panel data to solve the problems of serial correlation and endogeneity. The results indicate that IIT occurs more frequently among countries that are similar in terms of factor endowments. We also introduce economic dimension; this proxy confirms the positive effect of IIT. Our results also confirm the hypothesis that trade increases if the transportation costs decrease.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39756.

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Date of creation: 01 Jul 2012
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Handle: RePEc:pra:mprapa:39756
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  1. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
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  13. Don Clark, 2006. "Country and industry-level determinants of vertical specialization-based trade," International Economic Journal, Taylor & Francis Journals, vol. 20(2), pages 211-225.
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  16. Imre Fertő & Attila Karoly Soos, 2009. "Treating trade statistics inaccuracies: the case of intra-industry trade," Applied Economics Letters, Taylor & Francis Journals, vol. 16(18), pages 1861-1866.
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  21. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
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