Determinant factors of intra-industry trade: the case of Poland and its European Union trading partners

Justyna Łapińska

doi:10.12775/equil.2016.011

Abstract

This study has investigated the country-specific determinants of intra-industry exchange between Poland and its European Union trading partners during the time period 2002–2011. The analysis of the factors determining the Polish bilateral intra-industry trade with European Union countries applied an econometric model for panel data. As follows from the research, the intensity of intra-industry trade is dependent on numerous factors. The factors that exert a positive impact on the development of intra-trade exchange include the participation of processed products in bilateral trade between Poland and UE states, the intensity of trade with specific countries as well as the size of a partner country measured by its GDP per capita. Increases in the intra-trade turnover are also facilitated by EU membership and by the fact that Poland’s trade partners use a similar language, belonging to the group of the Slavic languages. The intensity of intra-trade exchange is weakened by the degree of the imbalance of trade turnover between trading partners, geographical distance that separates trading partners and significant differences in the size of trading partners’ GDPs.

Highlights

IntroductionIntra-industry trade, called two-way trade, consists in simultaneous importing and exporting products (including assemblies, subassemblies and components) coming from the same industry, which are close substitutes in the sphere of consumption, production, or in both of these areas (Grubel & Lloyd, 1975, p. 35)
Intra-industry trade, called two-way trade, consists in simultaneous importing and exporting products coming from the same industry, which are close substitutes in the sphere of consumption, production, or in both of these areas (Grubel & Lloyd, 1975, p. 35)
Based on the diagnostic tests conducted, it was found that a suitable model to study the impact of the macroeconomic determinants of the intensity of intra-industry trade is the model with fixed effects (FE)

Summary

Introduction

Intra-industry trade, called two-way trade, consists in simultaneous importing and exporting products (including assemblies, subassemblies and components) coming from the same industry, which are close substitutes in the sphere of consumption, production, or in both of these areas (Grubel & Lloyd, 1975, p. 35). Intra-industry trade, called two-way trade, consists in simultaneous importing and exporting products (including assemblies, subassemblies and components) coming from the same industry, which are close substitutes in the sphere of consumption, production, or in both of these areas The intensity of intra-industry trade is dependent on numerous factors. They are generally divided into two categories. These are the characteristics of the economies of trading partners involved in the exchange. The second group includes industry-specific determinants, i.e., the characteristics of the industry, in which the exchange of products is realised. The purpose of this study is to identify country-specific determinants impacting the intensity of intraindustry trade in Poland’s trade turnover with EU countries

Objectives

Methods

Results

Conclusion