Determinants Of Intra-industry Trade Research Articles

Türkiye Otomotiv Sektöründe Endüstri İçi Ticareti Etkileyen Faktörler Üzerine Ekonometrik Bir Analiz

Purpose: It is to empirically examine the factors affecting intra-industry trade in the automotive sector between Turkey and 24 OECD member trade partners. Design/Methodology: The determinants of intra-industry trade were tested with panel data analysis in the automotive sector. As a result of the test carried out to determine the model, regression analysis was performed with the Driscoll-Kraay standard error estimation method. Findings: The variables market size, development level, and trade openness have a positive impact on intra-industrial trade, while the variables market size difference, income inequality, and geographical distance have a reverse impact on intra-industry trade. Limitations: Export and import data for 2003–2019 are used in international trade figures in the 3-digit Standard International Trade Classification, SITC Revision-3. Originality/Value: Empirical application on the factors affecting intra-industry trade in the Turkish automotive sector is considered to be important and different in terms of subject.

Patterns and determinants of intra-industry trade in agri-food products between Bosnia and Herzegovina and CEFTA 2006

The paper aims to identify patterns and country-specific determinants of intra-industry trade (IIT) in agri-food products between Bosnia and Herzegovina (BiH) and other CEFTA 2006 parties in the period 2008-2018. The purpose of the paper is to contribute to filling the gap in the empirical literature on IIT of the South East European countries, especially in regard to non-manufacturing sectors. To investigate IIT intensity and structure the analysis employed Grubel- Lloyd indices and GHM methodology based on relative unit values. In order to examine the impact of various determinants on IIT in agri-food products, a random-effects Heckman selection model was estimated, following a sector-level approach in the analysis. The analysis indicates a lower level of IIT than expected and a strong dominance of its vertical type in all BiH bilateral relations within CEFTA 2006. The empirical results also suggest that the major determinants positively affecting IIT in agri-food products include the size of the trading economies, the similarity in their ethnic structure, membership in the common regional trade agreement, and common borders. By contrast, the results indicate that IIT is negatively affected by differences between the trading economies in terms of productivity and gross domestic product per capita.

Os determinantes do comércio intraindústria entre o Brasil, a União Europeia e a China, no período de 2006 a 2017: uma aplicação do modelo gravitacional

O objetivo deste trabalho é identificar os determinantes do comércio intraindústria (CII) entre o Brasil, a União Europeia e a China, no período de 2006 a 2017. Para isso, utilizou-se o modelo gravitacional do comércio com dados em painel por Mínimos Quadrados Ordinários e por Poisson Pseudo-Maximun-Likelihood (PPML). Os dados foram coletados nos sítios do Comex Stat, Worl Bank e do CEPII. Em relação aos resultados alcançados, constatou-se que o comércio intraindústria brasileiro com a União Europeia e a China é baixo e apresentou queda ao longo do período analisado. Em relação aos determinantes, averiguou-se que o custo de comércio afeta negativamente este comércio, ou seja, quanto maiores são os custos de comercialização entre o Brasil e seus parceiros comerciais, menor tende a ser o CII entre eles. Por outro lado, o tamanho econômico, a similaridade de renda e o grau de abertura do parceiro comercial afetam de forma positiva o CII do Brasil com os parceiros analisados

Determinants of Intra-Industry Trade between Vietnam and Countries in TPP

Intra-industry trade (IIT) has played an important role in international trade of Vietnam as a result of rapid growth of the country. This article investigates the level of IIT between Vietnam and 11 trading partners in Trans-Pacific Partnership (TPP) over the period 2000- 2014. Although there have been a large number of empirical researches contributed to the determinants of IIT, most of them only pay attention on developed countries where the trade flows are similar due to similar demand structure and production technology. Until now, there is no study on intra-industry trade between Vietnam and countries in TPP that Vietnam recently signed a trade agreement in early 2016. IIT is measured by the Grubel–Lloyd index. The index shows that the extent of intra-industry trade between Vietnam and the trading countries is not high due to the level of economic development and the market size. The determinants of IIT are examined using a panel regression model. In the empirical analysis, the results indicate that Vietnam’s intra-industry trade is positively correlated with country size, while it is negatively correlated with income dissimilarity, the trade openness, and geographical distance. This study contributes to the new theoretical trade theory on the evidence of developing country’s IIT.

Determinants of Intra-Industry Trade: An Investigation with Bma for the European Union

The empirical literature on determinants of intra-industry trade (IIT) is vast and comprehensive, yet as the authors failed to properly account for model uncertainty it has brought inconsistent and conflicting results. To resolve this issue, Bayesian model averaging was applied to investigate the robustness of 48 potential determinants of bilateral IIT for the panel of 26 European Union countries over the 1999-2011 period. Application of BMA demonstrated that 11 of them are robust determinants of IIT, namely real GDP product, trade openness, membership in the European Union and the Euro area, corruption, and differences in factor abundance. Among the factors of production, the key role in the determination of IIT patterns can be assigned to the differences in human capital. Yet, transportation cost and cultural similarity have no impact on the IIT patterns.

Intra-Industry Trade and Determinant: Evidence for ASEAN-Australia and New Zealand in the Context of AANZFTA

This study examines the changing patterns and direction of trade between Association of South- East Asian Nations (ASEAN), Australia and New Zealand in the context of the ASEAN-Australia-New Zealand Free Trade Area/Agreement (AANZFTA) signed in 2010. It investigates the extent of ASEAN’s intra-industry trade with Australia and New Zealand at the 3-digit disaggregated SITC level for the period 1990 to 2014. The study includes an analysis of intra-industry trade indices of trade intensities, the marginal intra-industry trade and the econometric model to identify the determinants of intra-industry trade. The results show that trade in general has increased and intra-industry trade between ASEAN-Australia increased specifically in manufacturing. New Zealand has developed intra-industry trade in both the manufacturing and agriculture sectors. Marginal intra- industry results suggest that some industries transforming from inter-industry trade patterns to intra-industry trade. The results of regression analysis provide some support to the thesis that increase in IIT comes naturally with high average incomes of trade partners and large average market size. As a country’s level of income goes up and its standard of living rise, its citizens tend demand and consume more high quality differentiated products, leading to higher levels of intra-industry trade. This study differs from the existing literature in terms of its scope, methods and policy perspectives. The findings have policy relevance for the ongoing negotiations for a regional comprehensive economic partnership with ASEAN 10, India, China, Japan, Australia and New Zealand. It is reasonable to suggest that intra-industry trade be given due consideration in ongoing regional and bilateral trade negotiations for potential mutual gains from trade for a sustainable regional economic growth.

DETERMINANTS OF INTRA-INDUSTRY TRADE: AN INVESTIGATION WITH BMA FOR THE EUROPEAN UNION

The empirical literature on the determinants of intra-industry trade (IIT) is vast and comprehensive, yet as authors failed to properly account for model uncertainty it has brought inconsistent and conflicting results. To resolve this issue, Bayesian model averaging was applied to investigate the robustness of 48 potential determinants of bilateral IIT for the panel of 26 European Union countries over the 1999-2011 period. Application of BMA demonstrated that 11 of them are robust determinants of IIT, namely real GDP products, trade openness, membership in the European Union and the Euro area, corruption, and differences in factor abundance. Among the factors of production, the key role in the determination of IIT patterns can be assigned to the differences in human capital. Yet, transportation cost and cultural similarity have no impact on the IIT patterns.

Equivalence between Increasing Returns and Comparative Advantage as the Determinants of Intra-industry Trade: An Industry Analysis for Korea

Equivalence between Increasing Returns and Comparative Advantage as the Determinants of Intra-industry Trade: An Industry Analysis for Korea-Grubel-Lloyd Index, Increasing Returns, Comparative Advantage, Intra-industry Trade, Trade Costs, Export Margins, Two-part Model

Equivalence between Increasing Returns and Comparative Advantage as the Determinants of Intra-Industry Trade: An Industry Analysis for Korea

A two-part model is estimated to see if increasing returns and comparative advantage are empirically equivalent in explaining intra-industry trade. The model has separate mechanisms for determining the occurrence and the extent of intra-industry trade. Estimation is based on an augmented Grubel-Lloyd index derived from the data set on SITC 7 goods at the 3-digit SITC (Revision 4) for country pairs in which Korea is fixed as a source country. Estimation results show that both increasing returns and comparative advantage can explain the occurrence and the extent of intra-industry trade.

The Determinants of Intra-Industry Trade in Energy Sector among Iran and its Major Trading Partners

The Determinants of Intra-Industry Trade in Energy Sector among Iran and its Major Trading Partners

Patterns and Determinants of Intra-Industry Trade in Vietnam’s Textile and Apparel Industry

This study examines the current trade patterns as well as identifies the country-specific determinants of IIT in the textile and apparel industry between Vietnam and its twenty main trading partners during the 2010-2015 period. The results point to a substantial level of IIT, which is entirely VIIT, indicating that Vietnam’s textile and apparel trade focuses on the trade of intermediate goods. The IIT indices are extremely high among Asian countries. Using a random effect model, important determinants of IIT, HIIT and VIIT are estimated. Results indicate that IIT, HIIT and VIIT are positively correlated with economic size and differences in economic size, and they are negatively correlated with trade imbalance and distance. Differences in Human Development Index have a positive effect on IIT and VIIT. In contrast, participation in FTA increases the share of IIT and HIIT. Consequently, in order to increase IIT of the Vietnamese textile and apparel industry, Vietnam has to accelerate the negotiations of FTA; invest in human resources; support R&D activities and high-technology sectors as well as domestic enterprises that provide intermediate inputs.

Patterns and Determinants of Intra-Industry Trade between Indonesia and Trading Partner Countries

This study discussed about the patterns and determinants that influenced the intra-industry trade between Indonesia and its trading partner countries, such as China, Japan, USA, South Korea and Singapore during 2004 to 2014. This study used an index of Grubel-Lloyd from four categories of manufacturing industry SITC 5-8 Rev. 3, 2 digits. In addition, this study also examined the determinants of IIT using panel data regression. Cross section in this study was between Indonesia with each trading partner countries (China, Japan, USA, South Korea and Singapore) and with its time series is 2004 to 2014. The results showed that IIT between Indonesia with each trading partner countries is high. Japan has the highest IIT among the other trading partner countries. The distance variable and the difference in GDP per capita did not affect the IIT. The average GDP variable has a positive and significant effect on the IIT, while the differences in value added per establishment at industry level has a negative effect on IIT.

Structure and Determinants of Intra-Industry Trade in Agro -Food Sector of Bosnia and Herzegovina

This paper aims to contribute to a better understanding of the structure and determinants of intra –industry trade specialization in agro food sector of Bosnia and Herzegovina over the transition period. The empirical analysis based on calculation of the following indicators: Grubel – Lloyd index (GL), Revealed Comparative Advantages (RCA indicator) and Relative unit value (RUV indicator). In order to show the level of intra-industry trade specialisation and to examine comparative advantages at sectoral level, as well for individual product group, are calculated Grubel – Lloyd index and RCA indicator. RUV indicator is used for analysis of two components of total intra-industry trade (TIIT); horizontal intra – industry trade (HIIT) and vertical intra- industry trade (VIIT) of agro-food products in Bosnia and Hercegovina. The analysis and calculations of above mentioned indicators are conducted using the data about international trade of agro-food products in Bosnia and Hercegovina for period of time 2008-2015, as well data at 4 – digit level, classified according to HS (Harmonised System). The final analysis in this paper is finished through applying K - means cluster analysis. K - means method was used for identificiation of different clusters of agricultural and food commodity groups related to comparative advantages, level of specialization in intra – industry trade, as well as the ratio between unit value export and unit value import. The emprical results indicated that GL index for observed period at sectoral level is lower than 50 %. The values of RCA indicator for agro-food sector of Bosnia and Herzegovina in international trade and to important trade markets indicate lack of comaparative advantages. In the structure of intra – industry trade is dominated vertical specialization.

Structure and Determinants of Intra-Industry Trade in Agro -Food Sector of Bosnia and Herzegovina

This paper aims to contribute to a better understanding of the structure and determinants of intra –industry trade specialization in agro food sector of Bosnia and Herzegovina over the transition period. The empirical analysis based on calculation of the following indicators: Grubel – Lloyd index (GL), Revealed Comparative Advantages (RCA indicator) and Relative unit value (RUV indicator). In order to show the level of intra-industry trade specialisation and to examine comparative advantages at sectoral level, as well for individual product group, are calculated Grubel – Lloyd index and RCA indicator. RUV indicator is used for analysis of two components of total intra-industry trade (TIIT); horizontal intra – industry trade (HIIT) and vertical intra- industry trade (VIIT) of agro-food products in Bosnia and Hercegovina. The analysis and calculations of above mentioned indicators are conducted using the data about international trade of agro-food products in Bosnia and Hercegovina for period of time 2008-2015, as well data at 4 – digit level, classified according to HS (Harmonised System). The final analysis in this paper is finished through applying K - means cluster analysis. K - means method was used for identificiation of different clusters of agricultural and food commodity groups related to comparative advantages, level of specialization in intra – industry trade, as well as the ratio between unit value export and unit value import. The emprical results indicated that GL index for observed period at sectoral level is lower than 50 %. The values of RCA indicator for agro-food sector of Bosnia and Herzegovina in international trade and to important trade markets indicate lack of comaparative advantages. In the structure of intra – industry trade is dominated vertical specialization.

Determinants of Intra-Industry Trade for Vietnam’s Manufacturing Industry

This study focuses on identifying the country-specific determinants of intra-industry trade in the manufacturing sector between Vietnam and major trading partners using random effects estimation. The results indicate that the extent of Vietnam’s intra-industry trade is positively correlated with average country size and average income levels, while it is negatively correlated with income inequality, distance, and trade imbalance. Those factors affect horizontal intra-industry trade (HIIT) and vertical intra-industry trade (VIIT) in the same way except for the effect of income inequality (DPCI) on VIIT with an unexpectedly statistically insignificant impact. The coefficient of FTA is unexpectedly insignificant in three estimations, indicating an ambiguous effect of the participation in regional economic integration schemes on the share of IIT, HIIT and VIIT.

An empirical analysis of intra industry trade in manufactures between Korea and ASEAN

Purpose – The purpose of this paper is to empirically investigate the patterns and determinants of intra-industry trade (IIT) in manufactures between Korea and selected ASEAN countries in the period of 1997-2011. Design/methodology/approach – The effects of country-specific determinants of IIT in manufactures are examined using panel data approach. Findings – The results show that the IIT of Korea-ASEAN manufactures is positively correlated with the average income levels and foreign direct investment inflow, while it is negatively correlated with the differences in factor endowments between Korea and selected partners. Overall, market size, income dissimilarity and factor endowments are indicated as most relevant determinants of IIT in manufactures between Korea and ASEAN countries. Originality/value – Despites the importance of Korea-ASEAN IIT, studies on this subject are limited. This paper examines the pattern and determinants of IIT and its components in Korea-ASEAN manufactured trade. The paper also suggests the policy implications for the development of IIT between two parties.

An Analysis of the Structure and the Determinants of Intra-industry Trade in Agri-food Products: Case of India and Selected FTAs

The growing evidence of intra-industry trade (IIT) in integrated markets has provided sufficient justification for trade in countries with similar endowments. While several studies have been undertaken looking at manufacturing and industrial goods, this article analyzes the structure and determinants of trade in agri-food products between India and members from its selected Free Trade Agreements (FTAs)—the South Asian Preferential Trade Agreement (SAFTA) and Association of Southeast Asian Nations (ASEAN). It is focused on agri-food products as the IIT literature in general is more focused on manufacturing products. The analysis found that India’s trade with partner countries is predominantly in the form of IIT. Nonetheless the relative IIT was found higher for countries such as Bhutan, Bangladesh and Nepal among SAFTA members and for Singapore among selected ASEAN members. The econometric analysis using to bit model showed that the free trade agreement had a positive impact on IIT. The empirical analysis further revealed that similarities in demand and agricultural-related factor endowments have a positive impact on IIT. Nonetheless macro variables from the supply side—GDP and per capita GDP—showed that the higher the dissimilarities the higher the IIT. The negative impact of increased average size on IIT is justifiable on account of the fact that the exploitation of scale advantages is lower for agri-food products as compared to other manufacturing products.

Horizontal and Vertical Intra-Industry Trade of NAFTA and MERCOSUR: The Case of the Automobile Industryy

The NAFTA and MERCOSUR agreements seem to have accelerated the regional integration process respectively within North and South of America. In the South in particular, MERCOSUR has led to trade liberalisation and deregulation, which has resulted in significant growth of its regional trade. In this article, we study the pattern of that trade growth in the automobile industry. Our results highlight an increase of intra-industry trade in the corresponding industry since the beginning of the 1990s. Firstly, we use the Grubel and Lloyd indicator (1975). Secondly, following Abd-el-Rahman (1991), Greenaway et al. (1995), Fontagne and Freudenberg (1997), we distinguish horizontally differentiated goods from vertically differentiated goods using a comparison of the unit values. With the increase of intra-industry trade, it appears that MERCOSUR has favoured in particular the development of trade in vertically differentiated goods. In NAFTA, intra-industry trade exists in most sectors and in two bilateral relations (US-Canada and US-Mexico). In MERCOSUR, the automobile industry has experienced the highest rate of growth in intraindustry trade, which accounts for 66% of total trade and 90% of all intra-regional trade. Thirdly, we analyse the nature of that increase and more precisely, the determinants of intra-industry trade. In order to explain the pattern of trade for the automobile industry, we use a gravity-type model taking into account some country-specific variables.

Intra-industry trade: a methodology to test the automobile industry in South Africa

This paper provides a study of the theory and empirical evidence of intra-industry trade (IIT) and relates it specifically to South Africa’s automobile industry. The automobile industry in South Africa is a key sector within the national economy and has experienced increased trade and foreign investment in recent years, and thus represents an important case study of IIT. In view of this, the paper proposes a methodology that may be used in future to assess the pattern and determinants of IIT between South Africa and its main trading partners in the automobile industry.

Determinants of Intra-Industry Trade between Pakistan and Selected SAARC Countries

This paper analyses country-specific and industry-specific determinants of intra-industry trade (IIT) between Pakistan and other SAARC countries using panel data techniques. This paper also disentangles total IIT into horizontal and vertical IIT. The Vertical IIT is further divided into high-quality and low quality IIT. This paper finds that country-specific variables are more important in explaining the IIT relative to industry-specific variables. The decomposition of IIT shows that in the SAARC region Pakistan’s IIT is mostly comprised of the vertical IIT. The share of horizontal IIT is comparatively less. The paper offers specific policy recommendations for the promotion of IIT in the SAARC region. JEL classification: F12, F14, F15 Keywords: IIT, Horizontal IIT, Vertical IIT