Intra-industry Trade Research Articles

Two Approaches of Measuring Intra-Industry Trade

Two Approaches of Measuring Intra-Industry Trade

The Impact of Intra-Industry Trade on South Korea’s Food Manufacturing Industry

The Impact of Intra-Industry Trade on South Korea’s Food Manufacturing Industry

The engines of intra-industrial trade in the agro-food industry between Tunisia and the EU-15

The engines of intra-industrial trade in the agro-food industry between Tunisia and the EU-15

The engines of intra-industrial trade in the agro-food industry between Tunisia and the EU-15

This paper analyses the determinants of the total intra-industrial (IIT) and vertical (VIIT) trade between Tunisia and the European Union (EU-15) for the 2000/2015 period. The results show that intra-industrial trade is mainly of a vertical nature. On the other hand, the results obtained from the panel model estimates using the generalised method of moments (GMM-sys) suggest that the factorial allocations and the vertical differentiation of the products are mainly negatively related to IIT and VIIT while the GDP of a larger economy shows a positive and statistically very significant relationship between intra-industrial trade (IIT and VIIT) and economic growth of the GDP of the EU-15 group of countries.

The Economic Complexity of the Visegrád Countries and the Role of Trade with Germany

Abstract The contemporary division of production in the global economy poses challenges typical for dependent market economies of the Visegrád countries (V4: Czechia, Hungary, Poland, and Slovakia). This comparative study explores whether the foreign trade of V4 with Germany contributes to their structural change. The analysis seeks to determine the long-term impact of specific intra-industry trade variables on the economic complexity, examined at different levels of technological sophistication. Our findings show that as a result of the characteristics of the trade dynamics, the progress of V4 structural change remains not as comprehensive as expected. As a result, it is critically important to provide incentives aimed at strengthening the geographical diversification of their exports and upgrade their position within the global value chains.

THE ROLE OF ECONOMIC FREEDOM, TRADE AND TECHNOLOGY ON TOTAL FACTOR PRODUCTIVITY GROWTH

There are many studies on Total Factor Productivity growth in the literature. These studies generally cover the pairwise correlation between total factor productivity growth and other variables. There is not multivariable study. This study examines relationship between economic freedom, human capital, intra-industry trade, foreign direct investment and their interaction effect on total factor productivity growth in natural resource rich and OECD countries. Panel data analysis is used in covering 20 Natural Resource Rich, 34 OECD countries between 1980 and 2014. Instrumental variables and Two Step Generalized Method of Moments are used to model relationship. There is a significant relation between total factor productivity growth and other variables in both models except foreign direct investment in natural resource rich countries.

Productivity, export competitiveness and the changing structure of trade in spices and plantation crops: An exploratory analysis

Enhancing trade competitiveness is viewed as one of the desired objectives of agricultural policy. It is also a widely held notion that enhancing productivity will result in commensurate improvement in competitiveness in global trade. This paper explores the relationship between productivity growth and export competitiveness (measured by revealed comparative advantage) in selected crop commodities in the spices and plantation crop sector. Secondary data on productivity and exports of selected crop commodities across spices and plantation crops for the last three decades is used to study the relationship. We find no evidence to imply that productivity growth will ensure better export competitiveness in these crops. The increasing competition for export markets among producing countries and increasing trade between producing countries adversely affect export competitiveness. The inter-trade among producing countries for spices is used to illustrate this point. The Grubel-Lloyd index is used to highlight the increasing intra-industry trade and the consequent change in the trade structure of these commodities from an Indian perspective. The study finds that a narrow focus on productivity gains at the country level will not enhance competitiveness in an increasingly open global trade scenario. The study outlines possible elements of complementary strategies (value addition, farmer collectivization, international cooperation) for enhancing the prospects of these commodities in the agricultural trade basket.

The U.S. and China in India’s Foreign Economic Policy: In Quest of Balance for Maintaining Strategic Autonomy

The paper investigates trade and investment relations between India and its two major trading partners, viz. the U.S. and China in the 2000-2010s. On the basis of mixed method research with equal use of quantitative and qualitative, as well as historical and statistical methods, the authors estimate the possibilities for expanding interstate interactions and the difficulties the countries might face. By comparing the scale and particulars of the product structure of Indo-American and Indo-Chinese trade, the authors reveal that intra-industry trade between India and the United States is at a fairly high level, which, in turn, is not typical for the trade between India and China, which is mostly inter-industry due to the sluggish cooperation of Indian and Chinese entrepreneurs. The authors assess the intensity of the Indo-American and Indo-Chinese bilateral trade between 2000-2018 by means of indices of intensity of Indias exports and imports to / from the USA and China, as well as indices of intensity of exports and imports of its partners to / from India. The obtained results outline the upward trend of the share of Indian exports to the U.S. relative to other countries, which indicates that India is successfully conquering the U.S. market, and Indian goods are becoming increasingly competitive. Meanwhile, the volume of Indian-Chinese trade remains on a much lower level than it could be expected with the current share of India in the world trade. In the meantime, neither for the United States nor for China, India is a dominant partner. The article also investigates major obstacles hindering the development of both Indo-American and Indo-Chinese bilateral relations. The obtained results enable the authors to predict that in the short- and mid-term economic cooperation between India and its leading partners is likely to strengthen, with India keeping striving for standing neuter while building the two most crucial vectors of its foreign economic policy.

Икономическата специализация – фактор за международната конкурентоспособност на България

The dynamics of trade flows has a strong impact on the development of Bulgaria's economic specialisation and is an important condition for strengthening its competitive position. Changes in international business, conditioned by the development of global value chains, define a new structure of industries and of export and import potential, and this leads to the conclusion of regional trade agreements that challenge national competitiveness. It is the great importance of these problems for the future foreign economic relations of our country and the ways of finding solutions that provoked the research interest of the authors of the recently published book "Bulgaria in International Economic Specialization" (see Panushev, Hristova-Balkanska, Hubenova-Delisivkova, Marinov, Stefanova, 2021). Carried out within the framework of the research programme of the Institute of Economic Research at the Bulgarian Academy of Sciences, the study presents the changes in theoretical concepts and models of international specialisation, Bulgaria's place in the structure of trade flows and approaches to assessing economic specialisation. The authors focus on regional economic structures and internationally defined patterns of specialization, which are the basis for national and firm strategy and policy building. The book explores the conceptual approaches of classical and contemporary theories of international trade and their interpretation in assessing changes in the world economy. It analyses the changes in Bulgaria's international specialisation, influenced by our inclusion in the common framework of the single European market, which intensifies competition between EU member states and leads to a restructuring of firms' activities. This also determines the changes in both intra-industry trade and trade with third countries. The authors point out that international specialisation based on international technological differences will create modern competitive advantages for Bulgaria and contribute to its inclusion in global value chains. The challenge for Bulgarian firms is partnership with European companies and "the distribution of productivity gains depending on and resulting from technological progress in Bulgarian production".

Diversified demand for health tourism matters: From a perspective of the intra-industry trade

Previous studies on health tourism were limited to a small range of topics related to medical tourism. At present, the concept of health tourism has become profound because medical care has been altered from “disease-centered” to “health-centered”. The main purpose of this study is to identify the key factors influencing the development of health tourism in China. To this end, in the first stage, an intra-industry trade theory was introduced and quantitative methods were applied to discover the important factors. In the second stage, multiple sources, including empirical studies, official data, research reports, and notably field investigations and case studies were incorporated to take in-depth discussions. The results indicated the foremost factors affecting the health tourism trade were total health expenditure per capita and the number of domestic health consumers. Notably, health tourism was substantially determined by the “willingness to spend on health” of domestic health consumers. In addition, Chinese health tourists were more likely to positively accept health tourism services in China. An important conclusion is that China should diversify health tourism offerings for different consumer groups. Once diversified products for health tourism are provided, the number of health tourism consumers will soar accordingly, which thus contributes to forming economies of scale, lowering the average costs of health treatment, increasing health tourism profit, and stimulating economic development.

Analysis of Intra-Industry Trade in Agri-Food Products Between Bosnia and Herzegovina and the European Union

Abstract Although research of intra-industry trade (IIT) has been intensive in the last several decades, the empirical literature focusing on this phenomenon in the Western Balkans countries remains limited, especially in agricultural sector. Aiming to contribute to the existing literature, the paper analyses patterns and country-specific determinants of IIT in agri-food products between Bosnia and Herzegovina (BiH) and the European Union (EU) during the period of their mutual trade liberalisation (2008-2018). The analysis employs Grubel-Lloyd indices and Greenaway-Hine-Milner methodology for measurement of IIT, and applies an econometric panel data model using a Poisson Pseudo-maximum likelihood approach in order to estimate effects of IIT determinants. The findings suggest that intra-industry agri-food trade of BiH with the EU is of low intensity and mainly of vertical nature, viewed totally and bilaterally. We found significant positive effects of trading countries’ sizes, common border and history on IIT, and negative effects of the geographic distance and differences in agricultural productivity.

DEVELOPMENT OF ESTONIAN TRADE PATTERNS

This paper describes specialisation dynamics in Estonian export using revealed comparative advantage (RCA) and intra-industry trade (IIT) measures. We analyse the development of the distribution of comparative advantage using descriptive statistics and Galtonian regression. Intra-industry trade dynamic is analyzed using a marginal approach. We generally observe a stable specialization structure of Estonian exports in 2006-2011, along with some changes in specialization in the years following that. Based on the analysis of the RSA index and the Galtonian regression, we can make the conclusion about the diversification of the specialisation structure. The most important component of trade expansion in Estonia within the considered time period is the intra-industry trade. In 2016-2020 there was a significant increase in the specialization shift component in trade dynamic, which indicates the structural changes in Estonian exports. The most essential structural changes during the last five years occurred in such commodity sectors as food and live animals, animal and vegetable oils, as well as machinery and transport equipment, which were caused by the increasing share of specialization shift.

A new assessment of economic integration in East Asia: Application of an industry-specific G-PPP model

It is well known that intra-industry trade and cross-border production networks have promoted economic growth and regional integration in East Asia. However, regional supply and production chains may have been formed differently across industries, reflecting different degrees and a different scope of regional economic linkages at an industry level. This paper makes a threefold contribution. First, to assess industry-level differences, this study adopts the generalized purchasing power parity (G-PPP) model using industry-specific producer prices. Second, the momentum threshold autoregressive (M-TAR) model is employed to allow for possible nonlinearity arising from the dynamic nature of regional economic growth and development. Third, the Granger causality test is also conducted to assess whether regional economies have autonomously integrated. The empirical results reveal that economic integration has progressed more autonomously in the electrical industry, as well as in the transportation equipment industry, as China and the ASEAN countries have become the final destination markets for finished products in these two industries.

Intra-industry trade, involuntary unemployment and macroeconomic stability

We introduce taste for variety in a one-sector model of differentiated products with productive labor externalities, considering two OLG countries, one with wage rigidity and the other with full employment. After opening the borders to capital mobility and intra-industry trade, steady state output and real wages improve in the full employment country and the saddle path stability, characterizing this country under autarky, will prevail in the globalized world if this economy is big enough. Unemployment increases in the country with wage rigidity and, for intermediate plausible values of both the current propensity to consume and of the labor externality, indeterminacy, which emerges in the rigid wage economy in autarky, will be exported to the world if this country is relatively big. Finally, we show that globalization leads to the appearance of stable deterministic cycles in activity, employment and the trade account, both through flip and Hopf bifurcations, when the world steady state is locally determinate, for empirically plausible low degrees of labor externalities. This implies that trade cycles occur in the absence of shocks to fundamentals, and even without uncertainty in expectations.

Trade costs and free trade agreements: Implications for tariff complementarity and welfare

This paper develops a three-country model of intra-industry trade under imperfect competition with trade costs between countries to examine the effects of a free trade agreement (FTA). Under sufficiently high trade costs, FTA member countries might have an incentive to set optimal external tariffs that are higher than the pre-FTA optimal tariffs (i.e., the tariff complementarity effect may not exist) and the formation of an FTA may worsen the non-member country’s welfare. Whether the member countries benefit from the FTA depends on the trade costs and the degree of substitutability among differentiated goods.

Trade Deficit of Bangladesh with China: Patterns, Propensity and Policy Implications

This paper aims to examine export, import and trade intensity, export specialization index, Herfindahl-Hirschman index for bilateral concentration and diversification indices to analyze the specializations, structure and trends of deficit in bilateral trade between Bangladesh and China from 1995 to 2018 and policy recommendations in this regard. The results reveal that the gap of export and import intensity between Bangladesh and China is widening rapidly perennial. The export specialization indices expose very significant outcomes where among the analyzed 16 sectors; 6 sectors exhibit high specialization, 3 sectors demonstrate medium, 3 sectors exhibit low and the rest of the 4 sectors disclose no specialization for Bangladesh’s export to China. The findings of the Herfindahl-Hirschman Index (HHI) reveal that from 1995 to 2010 the export of Bangladesh to China concentrated within few sectors but from the year 2011 to 2018 the export has been reclassifying steadily into diversification. The overall analysis of the indices suggests the necessity to be improved of the level of intra-industry trade between China and Bangladesh. Moreover, emphasis should be given to the sectors having a high specialization that endure the capacity to narrow the trade deficit. Furthermore, the export baskets of Bangladesh to China require to be diversified. Hereafter, various measures and implications are also suggested in the policy recommendation for further improvement.

The French (Trade) Revolution of 1860: Intra-Industry Trade and Smooth Adjustment

The Cobden-Chevalier treaty of 1860 eliminated French import prohibitions and lowered tariffs between France and Great Britain. The policy change was largely unexpected and unusually free from direct lobbying. A series of commercial treaties with other nations followed. Post-1860, we find a significant rise in French intra-industry trade. Sectors that liberalized more experienced higher two-way trade. Our findings are consistent with the idea that trade liberalization led to “smooth adjustment” that avoided costly inter-sectoral re-allocations of factors.

A Study on the Qualitative Trade Competitiveness of China to Japan in Information Technology Industry

Purpose: The purpose of this paper was to estimate the qualitative trade competitiveness of China with Japan relative to the information technology (IT) industry covering the period from 2007 to 2017. Research design, data, and methodology: Revealed Comparative Advantage (RCA), and Market Comparative Advantage (MCA) are used. Further, an Intra-industry Trade (IIT) index is used to analyze qualitative changes in horizontal intra-industry trade and intraindustry trade of high- and low-quality goods. Results: According to a general comparative advantage analysis, the IT industry has remained relatively inferior in trade with Japan. and mainly exports goods of inferior quality and imports goods of superior quality. Broadcasting equipment and information equipment mainly export inferior quality items and export superior quality items. In the case of electronic and semiconductor parts and equipment, inferior quality items are mainly exported, but the quality of export items has improved. As a result, it cannot be overlooked that the proportion of exports of superior quality items has increased. Also, in the case of communication equipment, it was found that items of inferior quality were mainly exported, but the proportion of exports of superior quality increased significantly, which indicates that the quality of export items has improved. Implications: In the trade with Japan, China’s IT industry’s exports and imports have increased. Although the deficit has decreased, it is still at a relatively disadvantage, especially for semiconductors, broadcasting equipment, and flat-panel display manufacturing equipment. In order to solve these problems, it is necessary to increase the production of high value-added products and further improve the technological level. In this regard, the Chinese government should actively formulate development plans and increase policy and capital investment.

Environmental Regulation and Intra-Industry Trade: An Empirical Analysis

ABSTRACT This article examines the impact of environmental stringency on the pattern of intra-industry trade (IIT) flows of four pollution-intensive industries, that is, pulp and waste paper, lime, cement, and construction materials, iron ore and concentrates, and dyeing and tanning extracts, by utilizing a balanced panel dataset comprising of 36 countries over the period 1990 to 2019. The environmental stringency variable has been estimated from the energy intensity of the trading countries. The results show that the environmental stringency coefficients are highly statistically significant, implying that environmental regulation emerges as an essential indicator of the IIT flows between two trading countries.

Analysis of Trade Patterns and Duration: Evidence from Food Industry in the OECD countries

This study conducts Kaplan-Meier survival estimates on food trade patterns among the OECD countries and explores whether different survival conditions exist in different t rade patterns of food sub-industries. By applying the extended Cox proportional hazard model, this study examines the effects of consumption on the survival rate for horizontal intra-industry trade pattern at the SITC four-digits level. Our findings show an important policy implication that the stability of horizontal intra-industry trade on the survival duration is driven by consumption in food industry among the OECD countries. Therefore, we suggest that policies should encourage the support of the horizontal intra-industry trade within the food industry to avoid unstable durations of trade in the global supply chain caused by the severe employment adjustments associated with traditional comparative advantage.