Intra-industry Trade Research Articles

Trade Integration Indonesia-ASEAN4 in AEC Era: A Case of Wood-based Products

The research was conducted to find out the level integration intensity using Grubel-Lloyd index. Moreover, since Horizontal and Vertical Intra-Industry Trade (IIT) could be distinguished, it was important to find out whether Indonesia-ASEAN4 IIT of wood-based products was in one of these categories. The Hufbauer index had been used as the measurement of product differentiation. Therefore, it could be the basic information for taking policy to boost Indonesia-ASEAN IIT for this industry. The data used comprise annual statistics of wood-based product export and import between Indonesia and ASEAN4 from 2010 to 2016 which were divided into eight categories of five digits ISIC. The Grubel-Lloyd index result shows that only ISIC 16102 has achieved strong integration, the others are still in mild and even weak integration. The Hufbauer index results show that all the values approached to zero, indicated that overall wood-based products traded by Indonesia-ASEAN4 are horizontally differentiated.

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.

Changes in world patterns of wild edible mushrooms use measured through international trade flows

International trade in edible wild mushrooms has increased spectacularly in recent years. Data point to structural changes in world markets in the purchase and sale of this non-wood forestry resource, which is becoming increasingly important in the society of many countries. The reasons why countries are exchanging these harvested products seem to be changing, making it necessary to interpret such changes on the basis of alternative explanations of the theory of international trade. The present research offers a world-wide study of these changes, analyzing the development of intra-industry trade indices of edible wild mushrooms from a wide array of countries, using foreign commercial transaction data from the United Nations Organization. The main results show that what is driving these changes seems to be the shift in world demand for these products, with changes in consumption habits that entail a major diversification in demand.

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.

Russia’s intra-industry trade in travel services: specifics and intensity

Russia’s intra-industry trade in travel services: specifics and intensity

Strukturne promene u srpskoj spoljnotrgovinskoj razmeni tokom tranzicionog perioda - komparativna analiza bitnih pokazatelja razmene

The article discussesthe structural changes in exports and imports during the transition process in Serbia. To address this issue, we calculated several indicators of the Serbian merchandise trade in the 2000-2018 period. After having computed the absolute growth of export and import and the values of intra-industry trade indices in the period under review, we compared the similarity of the export structure of Serbia and the import structure of the EU, which was used as a referent structure. To detect possible quality improvement of the Serbian trade sector, we analyzed qualitative changes of Serbia's exports (imports), through tendencies of goods at higher levels of processing, using more classifications, as such possible improvement would create important conditions for a sustainable and stronger export growth. After the calculation of trade specialization indicators, all obtained results were compared with those achieved by other Central and Eastern European (CEE) economies. The conclusion is that, despite strong Serbian export growth from 2000 to 2018 and moderate structural improvements, there are no conclusive signs of sufficient convergence to the EU import demand structure or sufficient growth of the share of goods at higher levels of processing in Serbian exports to imply the significant structural improvement of Serbia's trade, compared with CEE countries.

Does it make sense to deepen the economic cooperation of the western balkan economies?

The article discusses the structural changes in bilateral trade flows between Western Balkan (WB) countries in 2007-2018. The basic idea was to address whether there is a justification for the often proposed deepening of economic cooperation among WB states. After analysing the dynamics of mutual trade, we computed the value of intra-industry trade, whose potential decrease could indicate a divergence between observed trade structures. To detect a possible structural change in WB trade sectors, qualitative changes in those countries’ exports were calculated through the tendencies of a share of products at higher levels of processing. After calculating the export concentration coefficients, all the results were compared with those achieved by these countries in trade with the EU and in total. The article argues that there is no solid reason to pursue policies for strengthening mutual economic ties particularly towards a customs union, especially given the more attractive prospect of EU integration.

Main achievements and further tasks for Korean-Russian economic cooperation: From trade to investment and innovation

The article aims to examine the performance of trade and investment since the diplomatic normalization of relations between the Russian Federation (RF) and the Republic of Korea (ROK) and also suggests further areas for the development of economic cooperation between the two countries. The volume of trade between the two countries in 2019 has grown 116-fold compared to 1992. To increase trade volume, it is necessary to increase intra-industry trade to improve the mutual relationship. The direct investment of Korea into Russia has been increased, as well as diversified in different sectors. Korea’s total investment in Russia is approximately 2.75 billion USD, which is relatively small compared to investments made by Korea globally. Korea’s New Northern Policy seeks to strengthen cooperation with Russia. Korean companies must reevaluate the strategic importance of Russia. The lesson learnt from the previous experience of overcoming past crises is, first, to believe in the potential and capabilities of the Russian economy and market. The development of the Far East and the Arctic has made Russia’s energy supply chain more stable and flexible in responding to changes in the energy market. In addition, Russia is also becoming the center of the 4th Industrial Revolution thanks to its advanced scientific and technological capabilities, as well as the revival of its manufacturing industry. To advance economic cooperation between Russia and Korea, Korea has to invest in Russia’s global energy supply chain and participate in the formation of a global value chain in a certain industry by combining Russian advanced science and technology with Korean product development planning and global marketing capabilities. Specifically, The Far East, Arctic Development, and Triangle (or Quadrangle) Cooperation among ROK-DPRK-Russia (-China) will provide significant opportunities to Korean companies.

Competitiveness of Mutual Agrarian Foreign Trade of the Post-Soviet Countries

The paper is an analysis of foreign trade of the post-Soviet countries conducted for years 2000 and 2015. The aims of the research were thus twofold: to examine the bilateral trade scheme for the selected countries and to attempt to explore relations between competitiveness and thus the position of the agricultural commodity aggregates. The UN COMTRADE database was used. In the monitored countries, there is continuous growth of the commodity aggregate 0 - Food and live animals, which is strongly influenced by the commodity sub-aggregates 02 - Dairy products and bird eggs, S3-04 - Cereals and cereal preparations. The first phase entailed calculations of individual indicators of mutual trade (RCA, LFI, GLI and coverage of import). Subsequently, the indicators were used as input variables for further analyses. Using RCA and LFI indexes, the commodity aggregates were classified into 4 quadrants according to their position within the comparative advantage and competitiveness. Using a cluster analysis (based on Euclidian distance and Ward's method), individual commodity aggregates for the monitored countries were divided into groups based on the values of GLI, LFI and coverage of import. The groups were subsequently characterized for individual countries. Based on the conducted analyses, it can be stated that hypothesis 0 about the non-existence of significant changes within the group structure does not reflect the reality. Between 2000 and 2015, substantial changes occurred in terms of dividing the commodity aggregates into groups based on their common characteristics with regard to foreign trade. In addition, the diversity within foreign trade decreased between 2000 and 2015, and more commodity aggregates attain values around or below the average of a given aggregate. When assessing the intra-industry trade, it can be stated that some commodity aggregates can be regarded as important only with regard to Azerbaijan, Russia, Belarus, Kazakhstan and Ukraine. In these countries, this phenomenon is most frequently evident in the commodity aggregates Beverages or Vegetables and fruit.

Cooperation and Dependence in Relations between the Visegrad Four and Germany

The article examines the limits of economic independence of the Visegrad countries - Poland, Hungary, the Czech Republic and Slovakia - in their relations with Germany as the most important and influential economic partner. The author aims to trace the qualitative transformation of the relations and to discover the ways the Visegrad countries adapt their economies to the changing political, economic, social and technological realities. Methods of quantitative and qualitative dynamic analysis are used. The impact of the crisis caused by the coronavirus pandemic is considered. It is shown that the most important evidence of economic independence is trade in the categories of value added, the dynamics of the sectoral balance of mutual direct investments, as well as the signs of a mature knowledge economy. In the case of the Visegrad Group, dependence on the German economy has not disappeared, but it is moving to a different qualitative level. Based on the provisions of P. Krugman's new theory of international trade the author shows that there is a transition from vertical to predominantly horizontal intra-industry trade. Visegrad countries rely on Germany as a center for the redistribution of their value added, as well as a source of investments to the higher levels of value chains. Nevertheless, the issue of independent determination of their economic agenda is still quite acute for the Visegrad countries.

Trade Costs and Strategic Investment in Infrastructure in a Dynamic Global Economy with Symmetric Countries

This paper develops a two-country model of intraindustry trade with trade costs, which can be reduced by public investment in an international infrastructure capital, the stock of which accumulates over time. Depending on the trade costs and international distribution of manufac-turing firms, equilibrium patterns of trade are determined, and national welfare in each country is affected by these trade patterns. Taking the relationship between trade costs and national welfare into consideration, the governments carry out a dynamic game of public investment. We show that the dynamic equilibrium of the policy game may exhibit history dependency; if the initial stock of international infrastructure is smaller (larger) than a certain level, the infrastructure stock decreases (increases) over time, and the world economy will end up in autarky (two-way free trade) in the long-run. We also show that international cooperation is beneficial in the sense that it may enable the world economy to escape from a “low development trap.”

Potencijali izvoza uljarica iz Srbije

Oil crops are very significant, both in the world and in Serbia. In terms of production, the three most important oil crops in Serbia are sunflower, soybean and rapeseed. Beside significant oil crops production, substantial quantities of oil are produced as well due to significant processing capacities in Serbia. Considering the fact that over the last few decades Serbian market has been characterized by integration with the international market and considering the actual market liberalization with the EU, CEFTA countries, Russia and others, this paper analyses production and export of oil crops with special emphasis on comparative advantages in the export of oil crops using the method of revealed comparative advantage. Also, the level of intra-industry trade is considered in relation to the international market, EU and CEFTA countries. The results indicate that oils have more significant comparative advantage on the international market, especially sunflower oil.

Avoiding and escaping the 'commodity trap' in development

Based on the 'Prebisch-Singer' hypothesis, a strand of literature has emerged that focuses on the phenomenon of commoditisation and 'commodity trap' in development. Following Kaplinsky (2006), we revisit the hypothesis on a country's terms of trade in manufacturing trade. Offering high quality products and targeting 'niche' markets in high-income countries are beneficial strategies for developing countries to improve their terms of trade and escaping a potential 'commodity trap'. Barriers to entry via standards in the importing countries might even support such strategies. In this study, we firstly propose a proxy to capture commoditisation. Then, applying a gravity model on global bilateral intra-industry trade flows controlling for multilateral resistances over the period 1998-2014, it is shown that compliance with quality non-tariff measures (NTMs) reduces the negative impact of commoditisation on industry-level terms of trade.

Human Resource Management and Intra-Industry Trade

Purpose - The purpose of this paper is to develop a tractable general-equilibrium model of examining the impact of human resource management on intra-industry trade. Commonly, managers of Korean firms are promoted internally. It necessitates a study of human resource management and its impact on an industrial equilibrium. Design/methodology - This paper relies on theoretical analysis. We build a model in firms are hierarchical; an entrepreneur, managers, and workers. All individuals have heterogeneous managerial talents, which are the main source of managerial quality. Firms search talents for prospect managers, and eventually delegate them to supervise workers. The searching incurs a sunk cost. Findings - Our finding is as follows. Country 1, relatively abundant of managerial talents, can gain more from trade than Country 2, relatively scarce of managerial talents. This is because the higher searching cost leads to the lower survival rate of firms in Country 2. Implicatively, good jobs are destroyed, and aggregate income falls in Country 2. Originality/value - According to our study, relative abundance of managerial talents affects distribution of firm size and determines trade gain. This study can contribute to the literature of organization management and trade.

Handel wewnątrzgałęziowy w wymianie produktami rolno spożywczymi UE z USA

Celem artykułu było zbadanie intensywności i określenie typu handlu wewnątrzgałęziowego produktami rolno-spożywczymi UE z USA. Analizę przeprowadzono na podstawie danych pochodzących z bazy Comext-Eurostat, na 6-cyfrowym poziomie klasyfikacji HS w latach 2007-2018. Na podstawie zrealizowanych badań można stwierdzić, że handel produktami rolno-spożywczymi UE z USA rozwija się głównie zgodnie z modelem specjalizacji międzygałęziowej, która w latach 2007-2018 utrwalała się i pogłębiała. Wymianę wewnątrzgałęziową, częściej pionową niż poziomą, obserwowano przede wszystkim w obrotach produktami o wyższym stopniu przetworzenia.

Konkurencyjność krajów Unii Europejskiej w handlu zagranicznym produktami wołowymi

Głównym celem artykułu jest próba oceny konkurencyjności krajów Unii Europejskiej w handlu zagranicznym produktami wołowymi w 2017 r. w porównaniu z 2005 r. Realizując cel opracowania wykorzystano analizę porównawczą wartości eksportu, importu, sald handlu zagranicznego produktami wołowymi, wskaźnika ujawnionej przewagi komparatywnej RCA, wskaźnika przewag komparatywnych Lafaya oraz wskaźnika Grubela-Llyoda. W 2005 r. i w 2017 r. następujące kraje posiadały przewagę komparatywną w handlu produktami wołowymi: Austria, Francja, Irlandia, Luksemburg oraz Polska, a przewagi komparatywnej nie posiadały: Bułgaria, Cypr, Dania, Finlandia, Grecja, Włochy, Malta, Hiszpania, Szwecja, Portugalia i Wielka Brytania. W 2017 r. większość krajów UE realizowała model handlu wewnątrzgałęziowego. W 2017 r. w porównaniu do 2005 r. niektóre kraje UE zmieniły model realizowanego handlu z międzygałęziowego na wewnątrzgałęziowy lub odwrotnie. W 2017 r. Polska zajmowała piątą pozycję wśród największych eksporterów produktów wołowych w UE, a udział produktów wołowych zaimportowanych do Polski w przywozie produktów wołowych krajów UE był bardzo niski (i wynosił ok. 1%).

China’s Agri-Food Intra-Industry Trade: Focusing on Trade with East and Southeast Asia

China’s Agri-Food Intra-Industry Trade: Focusing on Trade with East and Southeast Asia

A Two-factor Model of Intra-industry Trade: A Demonstration of Robustness of Krugman’s (1980) Model

Abstract Using Cobb-Douglas production function with increasing returns to scale, this paper presents an intra-industry trade model which contains two factors, capital and labor. Thus, this paper extends Krugman’s (1980) single-factor model to a two-factor model with the entry cost. Firstly, an equilibrium analysis of closed economy is carried out. After the condition of existence and uniqueness of equilibrium is obtained, the analytic solutions are given. Secondly, it provides an analysis on trade effects. The results show that, under setup of symmetry among firms, the intra-industry trade can only enable consumers to benefit from product diversification without making firms achieve economies of scale. Obviously, this conclusion is consistent with Krugman (1980), which thus indicates robustness of Krugman’s (1980) model.

A study of degrowth paths based on the von Neumann equilibrium model

Abstract This paper revisits the von Neumann equilibrium model from a degrowth perspective. Degrowth can be either planned or autonomous based on voluntary simplicity (VS), characterized by voluntary constraints on the private consumptions. Any share of the working population is allowed to limit their private consumptions or ecological footprint. Degrowth means a lower economic growth rate as well as reductions in the usage of materials and fossil energy; however, when the economy cannot fit within the biophysical boundary despite such reductions, degrowth can also mean a deliberate transition towards lesser and cleaner production of a smaller number of goods. Taking ecological boundaries into consideration may thus switch the direction of an economy from growth to degrowth. Degrowth is consistent with economic equilibrium in the dynamic input-output model. Degrowth equilibrium results when a critical mass of the population prioritizes diminishing the ecological deficit over increasing the output levels. Green growth can take place during degrowth. While the economy gradually shrinks, the interest (profit) rate in macroeconomic equilibrium is negative due to the conservation target (excessive consumption has negative value to VS-type agents). Degrowing private consumptions implies less work, more leisure and better quality of the environment, improving social welfare. Degrowth can be advanced by adopting a more cooperative production system or by imposing high ecological taxes. The equilibrium model yields an argument for basic income as a means of supporting welfare during degrowth and of compensating for unpaid work. The open economy version of the model shows reduced scope for intra-industry trade between similar countries.

Vertical intra-industry trade and economic size: The case of Malaysia

ABSTRACTThe manufacturing sector has become increasingly important as the engine of growth in the external trade landscape in Malaysia. Meanwhile, most of the manufactured products are involved in intra-industry trade (IIT) and the past studies have documented that vertical intra-industry trade (VIIT) dominates IIT. Thus, using the panel autoregression (VAR) model, this study aims to shed light on the dynamic relationship between VIIT and economic size during 1988–2016 for the case of Malaysia and her top trading partners. The empirical results reveal positive bidirectional causality between VIIT and the economic size of the countries under study. This finding provides evidence that VIIT serves as the new strand of trades lending support to the trade-led growth hypothesis. Therefore, VIIT can act as an engine of growth for Malaysia in the short run. In addition, the findings imply that a shock to VIIT does not create chaos in Malaysia’s economy. On the other hand, a positive shock to Malaysia’s gross domestic product (GDP) increases the VIIT instantly and significantly. Overall, the empirical results suggest that Malaysia’s policy makers should continue to focus on stimulating the growth of VIIT.