Chapter 6 - Intra-Industry Trade Among Exporters of Manufactured Goods

Abstract

This paper examines the determinants of intra-industry specialisation in manufactured goods in bilateral trade among countries whose manufactured exports exceeded $300 million and accounted for at least 18 per cent of their total merchandise exports, in 1979. This choice has been made because intra-industry trade occurs principally in manufactured goods that, in their large majority, are characterised by product differentiation. Section 7.2 presents alternative hypotheses put forward in the theoretical literature as regards the determinants of intra-industry trade. Section 7.3 describes the methodology of estimation utilised in explaining variations in the extent of intra-industry trade among pairs of countries, defined as the relative share of such trade in their total trade. Section 7.4 reports the results obtained for the entire group of countries as well as for trade among developed countries, among developing countries, and between developed and developing countries. Section 7.5 provides an evaluation of the results obtained for the various groups of countries and indicates their policy implications.