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Trade Protectionism and Intra-industry Trade: A USA - EU Comparison

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Listed author(s):
  • Ferreira-Lopes, Alexandra
  • Sousa, Cândida
  • Carvalho, Helena
  • Crespo, Nuno

Abstract

The aim of this work is to find patterns for products included in the customs tariffs of the USA and the EU (composed of over 5000 products disaggregated at the 6 digit-level) which share similarities, defined by a set of international trade variables, namely the index of revealed comparative advantages (RCA), the Grubel-Lloyd index, and other indicators of international trade. There is a recent strand in the literature advancing a theory that links the degree of intra-industry trade with the level of protectionism. In order to test this theory we use cluster analysis as a method of data analysis and the Grubel-Lloyd index as a classification variable between groups. For each of the analyzed regions we obtain four different groups. Thereafter each of these four clusters are further characterized with the help of the other international trade indicators and the tariffs. Finally, we establish a comparison between the two regions by examining possible differences and similarities. The results show a significant difference in the tariffs applied between the USA and the EU, with the USA presenting a lower level of protectionism. Additionally, the results for the USA show a positive relationship between the degree of intra-industry trade and a lower level of protectionism, while for the EU the results are not conclusive.

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File URL: https://mpra.ub.uni-muenchen.de/49482/1/MPRA_paper_49379.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 49482.

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Date of creation: 31 Jul 2013
Handle: RePEc:pra:mprapa:49482
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Keywords: Trade Policy; Customs Tariff; USA; EU; Intra-industry Trade; Cluster Analysis;

Other versions of this item:

Find related papers by JEL classification:
  • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
  • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
  • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
  • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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  5. Houssein Guimbard & Sébastien Jean & Mondher Mimouni & Xavier Pichot, 2012. "MAcMap-HS6 2007, an Exhaustive and Consistent Measure of Applied Protection in 2007," International Economics, CEPII research center, issue 130, pages 99-122.
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  8. David Greenaway & Robert C. Hine, 1991. "Intra-Industry Specialization, Trade Expansion and Adjustment in the European Economic Space," Journal of Common Market Studies, Wiley Blackwell, vol. 29(6), pages 603-622, December.
  9. Klimis Vogiatzoglou, 2006. "Patterns and determinants of intra-industry trade within NAFTA," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 8(3/4), pages 262-279.
  10. Antoine Bouët & Yvan Decreux & Lionel Fontagné & Sébastien Jean & David Laborde, 2008. "Assessing Applied Protection across the World," Review of International Economics, Wiley Blackwell, vol. 16(5), pages 850-863, November.
  11. Patrick A. Messerlin, 2001. "Measuring the Costs of Protection in Europe: European Commercial Policy in the 2000s," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 102, November.
  12. Neil Foster & Robert Stehrer, 2011. "Preferential trade agreements and the structure of international trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 385-409, September.
  13. Gary Clyde Hufbauer & Kimberly Ann Elliott, 1994. "Measuring the Costs of Protection in the United States," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 77, November.
  14. Greenaway, David & Milner, Chris, 1988. "Intra industry trade and the shifting of protection across sectors," European Economic Review, Elsevier, vol. 32(4), pages 927-945, April.
  15. Bohara, Alok K & Kaempfer, William H, 1991. "A Test of Tariff Endogeneity in the United States," American Economic Review, American Economic Association, vol. 81(4), pages 952-960, September.
  16. Jayant Menon & Peter B. Dixon,, "undated". "Regional Trading Agreements and Intra-Industry Trade," Discussion Papers 95/14, University of Nottingham, CREDIT.
  17. Carolyn L. Evans, 2007. "National Border Effects: Location, Not Nationality, Matters," Review of International Economics, Wiley Blackwell, vol. 15(2), pages 347-369, 05.
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