Intensity Of Intra-industry Trade Research Articles

The Electronic Industry Intra-Industry Trade Analysis in 10 Indonesian Trading Partners

The importance of international trade in the context of refrigerator products makes intra-industry trade intensity (IIT) a very relevant tool. In international trade policymaking, particularly concerning refrigerator products, IIT is essential for understanding global economic dynamics, trade patterns, and trade relations between Indonesia and its trading partners. The use of IIT can provide deep insights into the extent to which there is an exchange of similar or similar but different goods among countries involved in the trade of refrigerator products. Therefore, the focus of the problem in this context is the extent to which the Indonesian refrigerator industry depends on ten trading partners in terms of exports and imports of refrigerator products and how this degree of dependence affects the stability of the sector in the face of changing global trade conditions. Regarding exports, India is the most important trading partner with a significant contribution, indicating a dependency that requires special attention. India has also emerged as an essential supplier, albeit with a lower level of dependence. Diversifying export and import markets should be considered to reduce the risk of dependence on certain trading partners. IIT analysis can also provide insights into the competitiveness of Indonesian products in the international market —improvement of export success also depends on understanding intra-industry trade dynamics.

Does intra-industry specialisation enhance or limit comparative advantage? Evidence from the world citrus fruit trade

In this paper, we aim to identify the intensity and nature of intra-industry specialisation in the global trade in citrus fruits. We used data from the United Nations Comtrade database. We performed both static and dynamic assessments of the intensity of intra-industry trade (IIT) by using the traditional Grubel-Lloyd index and the marginal IIT (MIIT) index, respectively. We also separated IIT into horizontal and vertical trade, and we verified the relationship between changes in the intra-industry pattern of trade and the level of comparative advantage gained by the largest producers and exporters of citrus fruits in the world. We used the revealed symmetric comparative advantage (RSCA) index to evaluate the level of international competitiveness. Conducting these analyses allowed us to fill the existing research gap by identifying the nature of IIT in products with specific quality characteristics but at a lower processing stage. The study's results indicated that the stronger the IIT or the more intensive shifts toward deepening the intra-industry specialisation, the lesser the comparative advantage of a country in the global export of citrus fruits. Nevertheless, the increased intensity of intra-industry specialisation does not always lead to a deterioration in the value of the trade balance.

Russian intra-industry trade: Trends in recent decades

The article reveals the trends of Russian intra-industry trade in the period 2001–2018 with the twenty largest partners, united in three groups, namely developed economies, developing countries and CIS states. Intra-industry trade was estimated using data for export and import for each of the 6-digit Harmonized Commodity Description and Coding System product groups. The authors use the Fontanier — Freudenberg and Grubel — Lloyd indices to determine the share of horizontal, vertical and high-quality vertical IIT in agricultural products, raw materials and manufactures. It was revealed that Russia’s intra-industry trade including high-quality vertical IIT, both in terms of value and intensity is highly concentrated on the CIS countries, especially Belarus. A vertical type of intra-industry specialization dominates Russia’s intra-industry trade with all groups of countries, which generally corresponds to global trends. However, the horizontal type of specialization is most pronounced in trade with the CIS countries. It was found that most of the intra-industry exchange takes place in trade in manufactures, mainly with Belarus. The intensity of intra-industry trade in all commodity groups with both developed and developing countries remains very low and has not changed over the period under review. It is noted that during the 2010s, the intensity of all types of intra-industry trade with Belarus and Kazakhstan increased, primarily trade in industrial and agricultural goods, which is largely due to integration. The authors conclude that further integration with this group of countries contributes to the development of intra-industry specialization, export sophistication and the realization of technological advantages.

INTENSITY AND STRUCTURE OF INTRA-INDUSTRY TRADE IN AGRI-FOOD PRODUCTS OBSERVED IN POLISH AND EU FOREIGN TRADE WITH THE US

The aim of this paper was to investigate the intensity and determine the type of intra-industry trade in agri-food products of Poland and the EU with the US. Analysis was based on data coming from the Comext-Eurostat database applying the 6-digit HS classification in 2007 and 2018. The intensity of intra-industry trade was established using the Grubel-Lloyd index, taking the diversification of intra-industry trade into horizontal, high-quality vertical, and low-quality vertical trade into consideration. The individual types were determined applying the criteria of similarity in unit values in exports and imports, proposed by David Greenaway et al. [1994]. Analysis showed that trade in agri-food products of Poland and the EU with the US developed mainly following a model of inter-industry specialisation. Intra-industry trade was observed primarily in trade in highly processed products. Analyses of EU trade with the US indicate the greatest role of intra-industry trade in high quality differentiated products, which may hardly be supplemented by other goods, while in Polish trade with the US it was vertical trade in low quality goods, which may be relatively readily replaced by products coming from other countries, in turn potentially leading to the loss of Poland’s share in the target market.

Country-Specific Determinants of Intra-Industry Trade in Clothing and Footwear between Poland and European Union Countries

The present study investigated the country-specific determinants of intra-industry trade between Poland and its European Union trading partners in clothing and footwear during the time period 2004–2017. The econometric model for panel data was used to identify the factors determining bilateral intra-industry trade with EU countries. The research findings show that the size of the trading partners' economies has a positive impact on the development of intra-industry trade in clothing and footwear. The size of the country, measured by the size of its GDP, is equated with the size of the market and the possibilities of selling differentiated products in it. The geographical distance separating the trading countries turned out to be a factor limiting the development of intra-industry trade. An unfavourable effect on the intensity of intra-industry trade is also the degree of imbalance in trade between trade partners. The study confirmed that the direction of the impact of all determinants of intra-industry trade identified is consistent with the predictions of the theory.

Examining Intra-Industry Trade between India & China: Is India on the Right Track?

Massive growth in Industrialization and Gross Domestic Product (GDP) and a stronger relation between India and China have led to an increase in bilateral trade between the two countries. This paper examines the intensity of Intra-Industry Trade (IIT) between India and China using A-Index over a two-decade period (1999 to 2018). Further, the study examines trade patterns of commodities traded between the countries and how have they changed over the years. The study used data of 99 commodities and conducts a decade wise comparison. Recent developments and policy changes on the bilateral trade front between India and China have also been discussed. The research has important implications for policymakers, economists and business involved internal trade.

EU-Korea FTA and Its Impact on V4 Economies. A Comparative Analysis of Trade Sophistication and Intra-Industry Trade

This paper investigates selected short- and mid-term effects in trade in goods between the Visegrad countries (V4: the Czech Republic, Hungary, Poland and the Slovak Republic) and the Republic of Korea under the framework of the Free Trade Agreement between the European Union and the Republic of Korea. This Agreement is described in the “Trade for All” (2015: 9) strategy as the most ambitious trade deal ever implemented by the EU. The primary purpose of our analysis is to identify, compare, and evaluate the evolution of the technological sophistication of bilateral exports and imports. Another dimension of the paper concentrates on the developments within intra-industry trade. Moreover, these objectives are approached taking into account the context of the South Korean direct investment inflow to the V4. The evaluation of technological sophistication is based on UNCTAD’s methodology, while the intensity of intra-industry trade is measured by the GL-index and identification of its subcategories (horizontal and vertical trade). The analysis covers the timespan 2001–2015. The novelty of the paper lies in the fact that the study of South Korean-V4 trade relations has not so far been carried out from this perspective. Thus this paper investigates interesting phenomena identified in the trade between the Republic of Korea (ROK) and V4 economies. The main findings imply an impact of South Korean direct investments on trade. This is represented by the trade deficit of the V4 with ROK and the structure of bilateral trade in terms of its technological sophistication. South Korean investments might also have had positive consequences for the evolution of IIT, particularly in the machinery sector. The political interpretation indicates that they may strengthen common threats associated with the middle-income trap, particularly the technological gap and the emphasis placed on lower costs of production.

Does the quality of political institutions affect intra-industry trade within trade blocs? The ASEAN perspective

ABSTRACTThere has been a renewed resolve for deeper integration and cooperation within ASEAN. Intra-industry trade (IIT) is often viewed as a way of achieving economic as well as political integration. This article tests for the effect that political regime and governance may have on the intensity of IIT. We particularly examine if quality of political institutions which includes corruption and democracy indices as well as economic factors comprising corporate tax rate, regional FDI flow, flexibility of exchange rate regime, size of the market, economic distance affect the intensity of horizontal and vertical IIT. The study finds that control of corruption and good governance both increase the vertical IIT but not the horizontal IIT. The study further finds that intra-economy FDI flow, stable exchange rate regime, market size and proximity positively affect IIT within the trade bloc. However the negative effect of corporate tax rate suggests that if countries were to coordinate their tax policies, they could avoid harmful tax competition and promote IIT across their borders. The findings regarding the effect those economic and political factors have on the intensity of IIT certainly warrants the attention of policy makers and researchers alike.

"Bilateral Intra-Industry Trade in Country Characteristics Context: The Case Study of Trade of Bosnia and Herzegovina with Croatia"

Abstract: The paper focuses primarily on intra-industry trade (IIT) which is researched in the context of country-specific characteristics. A three-decade-long academic research of IIT phenomena suggests that IIT is likely to be more intensive and mostly of horizontal type between countries that are at a similar stage of economic development, with the same level of trade openness and with intensive and significantly liberalized mutual trade. Geographical proximity of countries, especially their common border, as well as their similarities in some non-economic characteristics such as history, culture, language, also contribute to IIT intensity. Bosnia and Herzegovina (BH) and Croatia match most of these criteria for intensive and increasing IIT. The aim of the research is to check aforementioned thesis on IIT on a case study of BH in its trade with Croatia over the period from 2003 till 2016. Research is focused on IIT characteristics – intensity, trend and structure, both at aggregate level (based on calculating corrected and uncorrected Grubel-Lloyd indices) and at division level of Standard International Trade Classification – SITC (based on calculating standard Grubel-Lloyd index and relative unit values of export and import). The research findings indicate a continuously rising, although lower than expected, intensity of IIT, taking into account similarities between given countries in comparison with other important trading partners of BH and taking into account a high level of data aggregation. In BH trade with Croatia inter-industry trade still prevails while high intensive IIT appears in a very low number of product groups, coupled with the dominance of vertical IIT. However,at the same time a growing trend and a significant increase of IIT intensity in trade with Croatia have been identified.

Is Intra-Industry Trade Specialization a Precondition to Business Cycle Synchronization When Joining the Euro Area? The Case of Poland

Abstract The first objective of this paper is to present theoretical approaches to the impact of trade growth (induced by monetary integration) on business cycle synchronization which is an important factor of a country’s readiness for a currency union accession. The main conclusion from the first part of the analysis is that business cycle convergence and the cost of the lack of an autonomous monetary policy depend on intra-industry trade (IIT) intensity rather than on general trade growth. The second objective is to assess - using the IIT index as a measure of business cycle synchronization (and of susceptibility to asymmetric shocks transmitted mostly through trade channels) - preparedness of the Polish economy to the euro adoption. Calculations reveal that the IIT intensity in Poland is already relatively high (in particular in relations with the euro area members) and continues to rise. This confirms the increasing complementarity of Poland’s economy with the economic structures of the euro area partners which reduces the probability of asymmetric shocks.

European Union Accession and the Intensity of Intra-industry Trade in the New Member States in 1995-2014

European Union accession and the intensity of intra-industry trade in the new member states

CATALYST OF BUSINESS CYCLE SYNCHRONIZATION IN EAST ASIA

The essential question this paper seeks to answer is whether the business cycle co-movement in East Asia are fostered by internal bilateral trade within the region, specifically, intra-industry trade or by external forces like the influence of the world’s largest economy, namely, the United States. This paper examines the extent and robustness of the relationship between trade intensity and business cycle synchronization for nine East Asian countries in the period 1965–2008. Unlike previous studies which assume away the region’s concurrent connection with the rest of the world, in our regressions we control for both the US effect and the exchange rate co-movement in the region. We find that the coefficient estimates for intra-industry trade intensity remain robust and significant even after controlling for the US effect and the exchange rate co-movement. The findings confirm that regional intra-industry trade fosters business cycle correlations among countries in East Asia.

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

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.

The Formation of Russian Agrarian Trade Structure: Inter-industry vs. Intra-industry Trade Activities

The paper is focused on specialization of Russia’s foreign trade in agrarian products and foodstuffs in terms of inter-industry and intra-industry trade. The main objective of this study is to analyse the extent of intra-industry trade in Russia’s foreign trade in agricultural products and to identify significant changes in trade patterns at the industry level over the transformation period (1996–2012).The results coming from individual conducted analyses provide a systematic decomposition of Russia’s foreign trade into three trade types: inter-industry, intra-industry in horizontally and vertically differentiated products. Inter-industry type of trade dominates in Russian foreign trade in agricultural and food products and accounts for about a third of total trade flows. The analysis revealed significant differences in the intensity of intra-industry trade, depending on geographic region. The lowest level of intra-industry trade is observed in relation to Africa and South America, the highest - in relation to CIS countries. There were also found some trends, including the expanding intra-industry trade in relation to the CIS countries, as well as a decrease in relation to Asian and EU countries.

Determinants of Intra-Industry Trade in Agricultural and Food Products Between Poland and EU Countries

Abstract The present study investigates the country-specific determinants of intra-industry trade between Poland and its European Union trading partners in agricultural and food products during the time period 2002-2011. An econometric model for panel data is applied for the analysis of the factors determining Polish bilateral intra-industry trade with European Union countries. The research leads to the formulation of a statement that the intensity of intra-industry trade in agricultural and food products is positively influenced by the intensity of trade with EU countries and the level of economic development of the member countries (as measured by the size of their GDP per capita). Increase in intra-trade turnover is also facilitated by EU membership and by the fact that Poland’s trade partners use similar Slavic-based languages. Relative differences in the size of the economies and relative differences in Poland’s and its trading partners’ levels of economic development have a negative impact. The degree of the imbalance of trade turnover between trading partners also negatively influences the intensity of intra-trade exchange. The research confirms that the impact of all of the identified factors determining intra-industry trade is consistent with the predictions of the theory.

INTEGRATION OF POLAND’S REGIONS WITH THE EUROPEAN UNION – ASSESSMENT OF INTRA INDUSTRY TRADE RELATIONS

The purpose of the study is to present and assess international trade relations of Poland’s regions, with focus on the intensity of intra industry trade (IIT) with the EU countries. This kind of trade is treated as a measure of integration of Poland’s region’s economies with the EU market. The particular tasks addressed in the paper are: description of inspirations to deal with international trade at regional level; formulation of a concept of region as a small, open economy; assessment of intra industry trade links in static and marginal formula - at regional level for Poland’s regions. The proposed approach is a novelty in both ways: (a) studies on international trade for Poland’s regions are not so much developed; (b) intra-industry trade at regional level is a new topic that sheds light on real integration with the EU markets. The method used in the research is a standard formula of IIT as proposed by Grubell and Lloyd, weighted according to product’s shares in trade volume. Also the marginal IIT formula is used, as proposed by M. Brülhart. Calculations were done for four-digit Combined Nomenclature groups of products. As expected, intensity of IIT for regions is lower than for the whole country. There are important differences observed for Poland’s regions. As regions differ per se, also in terms of IIT one observes differences that reflect: proximity to the EU internal market, GDP per capita differences, role of foreign direct investments in region’s economies, structure of industry and exports as well as overall competitiveness. Five groups of countries have been distinguished. IIT intensity is the highest for relations with “the old“ EU member states. Also for the “new“ member states is relatively high. It corresponds to the main message of IIT theory, that predicts stronger IIT among integrated economies. DOI: http://dx.doi.org/10.5755/j01.eis.0.8.6770

The Effects of EU Customs Union Integration on Turkish Intra-industry Trade

EU is the major trade partner of Turkey with a significant share in total trade flows. Since Turkey switched from import substitution strategy to export-led growth strategy in 1980, import restrictions were eliminated. In January 1996, Customs Union (CU) with EU countries was put into force, which is a turning point in Turkey's foreign trade and is a considerable attempt towards trade liberalization. It is generally expected that intra-industry trade (IIT) is greater in the countries that experienced an economic integration. In this paper, the relation between the integration process and the intensity of IIT between Turkey and EU countries will be examined by comparing before-and-after periods of Turkey's CU membership. All calculations are made for the manufacturing sector by using Turkish bilateral trade data for 1990-2009 period and 2-digit ISIC Rev. 3 data.

The Determinants of the Greek Trade with the Other Balkan Countries: The Factor Endowment versus the Intra Industry Trade Hypothesis

The collapse of the socialist system in the Balkan countries was followed by an expansion of their trade with the western market economies. The expansion of trade was very impressive in the case of Greece which turned out to be a basic trading partner for the Balkan countries in transition mainly due to it’s geographical position. The expansion of intra-balkan trade was considered to be very important and beneficial for both parties, since new markets emerged for their exports but also alternative sources of provision of imports of either relatively lower production cost or better quality.Economic theory provides various explanations as to the determinants of international trade. In particular, the traditional theory stresses the importance of factors such as the competitive advantage due to low cost of production and the relative abundance of the factor of production most needed for the production of the goods in question. According to this approach nations specialize and trade on the basis of their competitiveness generated by cost leadership and factor abundance. So, labor abundant countries should be producing and exporting labor-intensive goods and the capital abundant countries capital intensive ones.The intra-industry trade approach explains international trade on the basis of similar products exported and imported because firms adopt the strategy of assigning the production of components or semi-finished products to sub-contractors operating in countries with a certain competitive advantage (e.g. low labor cost). By doing so the assigning firm maintains it’s competitive advantage in the production of the final product.This paper aims at testing the applicability of the two hypotheses in the particular case of the trade between Greece and the other Balkan countries. The patterns of the intrabalkan trade will be investigated on the basis of a data analysis. Factor costs will be used as the indicator of the applicability of the first hypothesis whereas the Grubel-Lloyd index will serve as an indicator of the intensity of intra-industry trade.

Intra‐industry Trade and Industry Distribution of Productivity: A Cournot–Ricardo Approach

AbstractThis study constructs a general equilibrium model of trade by incorporating Cournot competition in a Ricardian model of trade with a continuum of goods. In this model, the share of intra‐industry trade (IIT) in bilateral trade volume decreases as trading partners become more different in terms of the industry distribution of labour productivity. We show that this relationship is a special case of a general accounting identity: the intensity of IIT is decreasing in a specialisation index. The specialisation index is equal to the difference in the industry distribution of labour productivity in our Cournot–Ricardo model, while it is equal to the difference in factor endowments in the well‐known monopolistic competition model. As both technologies and factor endowments would play important roles in shaping specialisation patterns, we conjecture that the share of IIT is decreasing in both measures of specialisation. Using the data from Nicita and Olarreaga, we test this conjecture. Our pooled ordinary least squares (OLS) estimations strongly support this conjecture. However, in fixed‐effect panel estimations, only the industry distribution of productivity is significant in the entire sample. Subdividing the sample, we find that the difference in the industry distribution of productivity is significant in explaining North–North IIT, while the difference in factor endowments is significant in explaining North–South IIT.

Trade Integration in East Asia: An Empirical Assessment

This study employs a gravity model of bilateral trade flows at the one-digit level of the standard international trade classification (SITC) product categories over the period of 1996 to 2005 to provide an empirical assessment of regional trade integration in East Asia. The formation of the ASEAN free trade area agreement is found to have both positive and negative effects on trade both among members and between members and the rest of the world, subject to SITC product category. Although the differences between actual and predicted levels of intra-ASEAN trade and of trade between ASEAN and other East Asian countries have been reduced, there remain product categories indicating a low degree of trade integration. Those product categories include food and live animals, machinery and transport equipment, and miscellaneous manufactured articles. Finally, the level of intra-industry trade intensity based on predicted trade values confirms that ASEAN is involved in intra-industry trade among its members more than trade with other East Asian countries.