Intra-industry Specialization Research Articles

The Goods Structure of Trade between Polish Regions and the European Union (1)

The Goods Structure of Trade between Polish Regions and the European Union (1) The goal of this article is to present the structure of trade between Polish regions (voivodships) and the European Union. The research is a dynamic analysis making it possible to compare the time before and after the expansion of the European Union. The timeframe of the discussed issues relates to 1999-2007. Attention is paid to the scale and diversified nature of the changes to the goods structure of export and import activities undertaken by Polish voivodships to (from) the European Union. The analysis is preceded by the characteristics of the European Union's role in trade of specific regions. Finally, the degree of intra-industry specialization is evaluated as is the trend in changes to the trade between Polish regions and European Union countries.

Intra-Industry Specialization in United States-Mexico Trade

This paper uses changes in intra-industry specialization indicators to assess factor adjustment pressures that may have been experienced by U.S. industries as a result of growth in U.S.-Mexico trade over the North American Free Trade Agreement (NAFTA) implementation period. Many industries experienced large increases in intra-industry trade. Few U.S. industries were candidates for significant factor adjustment pressures. Industries facing adjustment pressures accounted for nineteen percent of total U.S. imports from Mexico. Findings should lessen opposition to the North American Free Trade Agreement and future regional integration initiatives in the Western Hemisphere by easing fears that jobs will disappear.

Trade barriers, multinational involvement and intra-industry trade: panel data evidence from India

The article analyses the effects of trade barriers and multinationals on the intensity of intra-industry trade (IIT) in a panel of Indian manufacturing industries from 1988 to 1999. We find that the intensity of IIT increases with the reduction of trade barriers. This is expected as greater competition from imports leads individual plants in the domestic industry to specialize in the manufacturing of unique varieties. The analysis suggests that horizontal (market seeking) multinational activities in the domestic industries exert a negative influence on IIT. This is consistent with the view that horizontal multinationals displace exports to the host country. At the same time, our results indicate that IIT will be stimulated to the extent that the entry of multinationals induces intra-industry specialization. We also analyse the role of product differentiation and plant level scale economies in determining IIT.

Intraindustry Specialization and the Proposed Korea–United States Free Trade Agreement

Changes in intraindustry specialization indicators over the 2000–2007 period are used to assess factor adjustment pressures that may arise in Korea from the proposed Korea–United States Free Trade Agreement (KORUS FTA). There is considerable scope for intraindustry specialization between Korea and the United States. Results show few industries in Korea are candidates for adjustment problems. The 14 industries that may face adjustment pressures account for 13% of all Korean imports from the United States. Long tariff phase-out periods, tariff-rate quotas and import safeguards will be used to ease factor adjustment pressures in import-sensitive industries.

Adjustment Problems in Developing Countries and the U.S.-Central America-Dominican Republic Free Trade Agreement

This article examines changes in intraindustry specialization indicators over the 1992–2006 period to assess the potential for factor adjustment problems that may arise in Central American countries and the Dominican Republic (CA/DR) with trade growth resulting from the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). Results show there is considerable scope for intraindustry specialization between CA/DR countries and their most important trading partner. Few CA/DR industries are likely to encounter adjustment problems. When adjustment problems are indicated, extended phase-out periods for tariffs, tariff-rate quotas, and import safeguards are used to ease factor adjustment pressures in import-sensitive industries.

Production Structure in the Context of International Trade

This paper deals with the recent empirical phenomenon of intra-industry trade, i.e., trade in similar goods between similar countries. It treats this phenomenon from the point of view of the theory of the structure of production, highlighting the importance of the sequential nature of production and the heterogeneity and specificity of factors of production, as developed by Carl Menger, Eugen von Böhm-Bawerk and their followers of the Austrian School of economics. The reader is first exposed to the historical development of production and capital theory. A simple theory of production structure, along the lines of Austrian economics, is afterwards presented and a useful tool for the analysis of intra-industry trade is developed. In the following discussion of existing theories of intra-industry trade, we make the case for vertical intra-industry specialization, complex manufactured goods and sliced-up production chains across countries. The reader immediately observes the importance of Austrian production structure theory for the analysis of intra-industry trade. We accordingly apply the concepts of the structure of production to intra-industry trade and analyze, in particular, the time- and place-aspects of international production. The concluding section shows the relevance of our approach to intra-industry trade for the analysis of business cycle synchronization across countries, and for the optimum currency areas theory.

On the Determinants of Intra-industry Trade: Specialization and Relative Factor Endowments

This paper derives a general relationship among intra-industry trade, specialization, and gravity. This relationship holds in any two-country trade model under assumptions that are frequently adopted in theoretical trade models. Using this general relationship, we can take an integrated approach to the theory of intra-industry trade. In two-good, two-factor models, this relationship implies that the intensity of intra-industry trade is decreasing in the difference in factor proportions and is increasing in the product of per-worker GDPs. Thus, the popular assertion that a negative correlation between the intensity of intra- industry trade and the difference in factor proportions supports monopolistic competition is groundless. Using panel data on bilateral trade flows, we estimate these relationships. We find that the negative correlation between intra-industry trade and specialization is quite robust. We also find a robust positive correlation between intra-industry trade and the product of per-capita GDPs.

INTRAINDUSTRY SPECIALIZATION AND THE UNITED STATES–CENTRAL AMERICA–DOMINICAN REPUBLIC FREE TRADE AGREEMENT

This paper examines changes in intraindustry specialization indicators over the 1992–2004 period to assess the potential for structural adjustment problems that may arise in the United States with growth in trade resulting from the United States–Central America–Dominican Republic Free Trade Agreement (CAFTA‐DR) between the United States and six Central American countries—Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, and the Dominican Republic. CAFTA‐DR will expand market access for US exporters. Few US industries are likely to encounter structural adjustment problems. Given the relatively large size of the US economy, and the small number of industries that face potential adjustment pressures, the United States should have liberalized all trade immediately. When potential adjustment pressures are indicated, long tariff phaseouts, complex rules of origin, and import safeguards are used to delay factor adjustments in import‐sensitive industries.

Struktura výroby, vnitroodvětvový obchod a jejich relevance pro teorii optimálních měnových oblastí

This paper deals with the recent empirical phenomenon of intraindustry trade, i.e. trade in similar goods between similar countries. It treats this phenomenon from the point of view of the theory of structure of production, highlighting the importance of sequential nature of production and heterogeneity and specificity of factors of production, as developed by Carl Menger, Eugen von Boehm-Bawerk and their followers of the so-called Austrian school of economics. Simple theory of production structure, along the lines of Austrian economics, is presented and a useful tool for the analysis of intraindustry trade is developed. In the following discussion we make the case for vertical intraindustry specialization, complex manufactured goods and sliced-up production chains across countries. The reader immediately observes the importance of Austrian production structure theory for the analysis of intraindustry trade. We accordingly apply the concepts of the structure of production on intraindustry trade and analyze, in particular, the time- and place-aspects of international production. Finally, we show the relevance of our approach to intraindustry trade for the analysis of business cycle synchronization and Optimum currency areas theory.

Intra-Industry Specialization in Textiles and Apparel

This paper examines changes in intra-industry specialization indicators over the 1992-2004 period to assess potential for structural adjustment problems that may arise in U.S. textile and apparel products with growth in trade. Separate analyses are conducted for U.S. bilateral trade with China, Mexico, and DR-CAFTA members. Seven of the sixteen three-digit Standard International Trade Classification (SITC) product groups are expected to experience significant structural adjustment problems. With the exception of one group, all fall within the apparel and clothing (SITC 84) category. Results suggest substantial increases in U.S. imports from China are influencing these findings.

Armington elasticities and induced intra-industry specialization: The case of France, 1970–1997

Elasticities of substitution among imports and competing domestic production (Armington elasticities) play a key role in open-economy computable general equilibrium (CGE) modeling. Armington elasticities used in CGE models refer to heterogeneous product groups rather than homogeneous products, thus reflecting differences in the composition of the respective imported and domestic production. As these differences may rise over time, due to intra-industry specialization, empirical Armington elasticities will decrease. The paper examines this conjecture, using data for France, 1970–1997. It finds that for most product groups considered the Armington elasticity had a peak value in the 1980s and declined thereafter. While the average elasticity amounts to 0.84 in 1976–91, it declined almost continuously to 0.21 in 1982–97.

EXPORT DIVERSIFICATION AND INTRA-INDUSTRY TRADE IN SOUTH AFRICA

This paper uses cumulative export experience functions to explore the structural dynamics of South Africa's exports for the period 1990–2003. It finds a large spread of emerging non-traditional accelerating export products across industry clusters of different factor intensities, steadily increasing their proportion in total exports and her main markets. Shift-share and correlation analyses show that increased intra-industry specialisation and trade within import competing product groups explain the structural change in the direction of export diversity. With respect to quality, as measured by relative unit prices of exports and imports in intra-industry trade with the EU and the US, a relative improvement of export quality is found.

INTRA-INDUSTRY SPECIALIZATION AND THE NORTH AMERICAN FREE TRADE AGREEMENT

This article provides a detailed examination of changes in indicators of intra-industry specialization in manufactured goods in trade between the United States and Mexico over the first five years of the North American Free Trade Agreement. The analysis is conducted at the three-digit SITC level of industry aggregation. Many industries experienced large increases in intraindustry trade (IIT). Only nine industries experience declines in IIT. Changes in various indicators of intra-industry specialization suggest few U.S. industries are candidates for significant adjustment problems. Industries facing potential adjustment pressures account for less than one-fourth of total U.S. imports from Mexico. These findings should lessen opposition to greater regional economic integration in the Western Hemisphere by easing fears that entire industries and jobs will disappear.

Does the measurement of intra-industry trade matter?

Does the Measurement of Intra-Industry Trade Matter? — This paper discusses different methods of capturing the main aspects of the Chamberlin-Heckscher-Ohlin-Samuelson model. Of particular interest are the distinction between horizontal and vertical intra-industry trade, the adjustment of aggregation biases, and the definition of inter- and intra-industry specialization at product level. The main findings are that it is important to disentangle horizontal and vertical intra-industry trade, and to consider specialization patterns within refined product groups. Moreover, there is a nonlinear relationship between intra-industry trade and economies of scale that may explain contradictory results in the literature.

Vertical specialization and intra-industry trade: The role of factor endowments

Vertical Specialization and Intra-Industry Trade: The Role of Factor Endowments. — In this paper, we use vertical differentiation models of the Falvey-Kierzkowski type to study the effects of differences in factor endowments on vertical intraindustry specialization. We focus on Spanish intra-industry trade, as Spain typically exports low-quality varieties to the northern countries of the OECD and high-quality varieties to the southern ones. In order to achieve more general results, we consider different types of productive factors: physical, human and technological capital. Our results confirm that factor endowments play a significant role in explaining vertical intra-industry specialization.

Determinants of intraindustry trade between the united states and industrial nations

This article identifies industry-level determinants of intraindustry trade (IIT) between the United States and other industrial nations. Results do not support the role of scale economies in determining the extent of IIT. Significant negative relationships are established between scale economies and the extent of IIT. Other findings are consistent with a monopolistic competition approach to trade modeling. The extent of IIT is greater for industries with many establishments and low seller concentration ratios producing differentiated and nonstandaridized goods. Modern theoretical models preoccupied with scale economies should place more emphasis on other sources of intraindustry specialization related to monopolistic competition, such as variety, quality, technologically based product differentiation, and the degree of product standardization.

International specialization and structural change in the Swedish Manufacturing Industry, 1969–1992

International Specialization and Structural Change in the Swedish Manufacturing Industry, 1969–1992. — The increasing trade orientation of Swedish manufacturing 1969–1992 was mainly caused by increasing intraindustry specialization with most industries. Intraindustry specialization was found to be related positively to the skill intensity of the industry and negatively to average plant size and the incidence of trade barriers. The paper evaluates the links between specialization and inter-as well as intraindustry structure. It was found that changing patterns of relative international competitiveness among industries accounted for more than half of the total interindustry structural change in employment in 1969–1992. The mean plant size tends to increase with intraindustry specialization.

Trade liberalization and intra-industry specialization: the Australian experience

Much of the growth in trade among the industrialised countries, and more recently among countries in the Asia-Pacific region, has taken the form of intra-industry trade (IIT). Australia has historically had one of the lowest shares of IIT among OECD countries. This paper examines how Australia's IIT has changed in the 1980s in response to the process of trade liberalisation and completion of the CER pact with New Zealand. Towards this end, IIT indexes are estimated for Australia's multilateral and trans-Tasman trade for 1981 and 1991 for 132 industries using data at the 3 and 4-digit level of the SITC. The results point to a sharp increase in the share of IIT for both multilateral and trans-Tasman trade. We also find that the industries that had undergone the largest reductions in protection levels had also increased their shares of IIT quite considerably. These findings suggest that the short to medium run adjustment costs associated with trade liberalisation are likely to be lower than expected as a result of increased intra-industry specialisation. If IIT continues to grow in response to the on-going process of internationalisation of the Australian economy, then Australia's prospects for expanding its share in world trade, and particularly in the Asia-Pacific region, are likely to be significantly boosted.

Determinants of Intra-Industry Specialization in Swedish Foreign Trade

In a theoretical model, the share of intra-industry trade in an industry's bilateral trade flows (IIT) is determined by relative factor prices in the trading countries, factor intensity, and the elasticity of substitution in demand between products in the industry. The more similar the relative factor prices in different countries, the less extreme the factor intensity, while the lower the elasticity of substitution between the products in an industry, the larger the IIT. The empirical study confirms these implications. Furthermore, tariffs and transport costs are shown to have a greater negative effect on intra-industry trade than on inter-industry trade. Copyright 1991 by The editors of the Scandinavian Journal of Economics.

Intra-Industry Trade and Specialization in Processed Agricultural Products: The Case of the US and the EC

The literature on intra-industry trade has generally focused on manufactured goods. Given the growth of trade in processed agricultural products, this paper examines trade in a sample of high-value products for the US and the EC using indices of intra-industry trade and intra-industry specialization. The results indicate that for total trade in 1986, the EC exhibited more intra-industry trade across the sample than the US, although much of this was due to trade among EC countries. Further, over the period 1977–1986, the EC indicated a greater tendency towards intra-industry specialization in its geographical pattern of trade than the US.