Marginal Intra-industry Trade Research Articles

Marginal Intra-Industry Trade and Labor Adjustment Cost in EU

Intra- Industry Trade is a crucial issue from the point of view of increased importance in international trade and its' labor adjustment cost influence in the literature. This research analyzes the relationship between MIIT and labor adjustment cost by comparing the different measures of marginal intra-industry trade. We compare the A, MD1, and MD2 indexes, which are different measures of MIIT. 127 manufacturing subsectors are used in 15 European Union countries in the period between 1990- 2017. The result of dynamic panel data of system GMM shows that the MD2 measurement method explains the low adjustment cost better than MD1. It significantly correlates with a few of the variables concerning trade. MD1j has a strong relationship with sectoral employment, consumption, productivity, and openness in the manufacturing industry in the European Union. Three measures of MIIT present a negative link between MIIT and adjustment cost, which is suitable with the literature.

Revisiting Marginal Intra-Industry Trade and Portuguese Labour Market.

This study aims to empirically test the smooth adjustment hypothesis (SAH) in the Portuguese labour market during 2000-2018, considering changes in employment, wage, productivity, consumption and the marginal intra-industry trade. So, following the literature, a greater marginal intra-industry trade intensity should reduce adverse shocks expressed in temporary inefficiencies such as undesirable job search costs and workers' relocation and retraining. According to state of the art, our research strategy considered a battery of diagnosis tests about the random generating process of variables included in a dynamic panel data model. The extensive work developed in this paper is a further step to introduce recent techniques such as the Method of Moments Quantile Regression and the cointegration panel models to infer long-term dynamics. Overall, the main point is that we find evidence confirming the hypothesis mentioned above, showing that mutual interactions reduce adverse shocks above mentioned. Thus, the study demonstrates that the marginal intra-industry trade promotes smooth adjustment in the Portuguese economy.

Intra-industry Trade in Latvian Agricultural Commodities and Food Products

The share of simultaneous exports and imports of the same types of products by a country or intra-industry trade has gown continuously over the last century. At the same time, share of inter-industry trade when countries specialize in production and trade occurs only between industries has declined. Trade in differentiated products of the same sector and the same stage of processing is referred to as a horizontal intraindustry trade. Such products are close substitutes for each other in terms of factor inputs and consumption. Trade in products of the same sector at different stages of processing is referred to as a vertical intra-industry trade. According to economic theory, a rise in the share of intra-industry trade is occurring within the trade growth in general due to an economic development and broader integration. Since early nineties, Latvia has remained a net importer of agri-food products. At the same time, both exports and imports of agricultural commodities and processed food products has consistently grown, with total trade turnover increasing. The objective of the study is to determine the share of the intra-industry trade and structural changes in the sectors of Latvian agricultural production and food processing over the last decade. To reach the research objectives, Grubel-Lloyd intraindustry trade indexes, Brülhart marginal intra industry trade indexes and Thom-McDowell indexes of total marginal intraindustry trade were compiled for Latvian agri-food trade data over ten years period from 2002 to 2011. The research results show consistently high share of intra-industry trade in total Latvian trade in agricultural commodities and food products over the whole period. A shift from predominantly vertical marginal intra-industry trade towards horizontal marginal intraindustry trade is observed.

Labour Market Adjustment and Intra-Industry Trade: Empirical Results from Indian Manufacturing Sectors

During the last two decades, India has witnessed several trade and industrial policy reforms. The objective of the study is to examine the relationship between dynamism of India’s two-way trade, measured through Marginal Intra-Industry Trade (MIIT) index, and labour market adjustments, reflected through absolute employment changes, in select manufacturing sectors over 2001–2015. India’s MIIT in select sectors generally display an upward trend over the sample period, while a mixed dynamics is observed on the employment front. The generalized method of moments (GMM) estimation results indicate that MIIT, increase in productivity, skilled workforce intensity, industrial concentration, incremental FDI inflows and trade openness positively influence absolute employment changes, whereas unskilled wage exerts a negative impact on the same. The analysis further concludes that high relative growth rate, skill-intensity, incremental FDI inflows and higher productivity in a sector, also characterized by higher MIIT, may lead the firms to employ more productive and competitive resources, resulting in higher absolute changes in employment. The obtained results do not support the Smooth Adjustment Hypothesis (SAH) predictions in the Indian context.

Intra-industry Trade in Croatia: Trends and Determinants

This paper investigates trends and determinants in intra-industry trade in Croatia. Intra-industry trade refers to a two-way trade of differentiated products. The level of intra-industry trade between Croatia and EU, CEE, and countries worldwide is calculated using the Grubel-Lloyd index under HS-2 and HS-4 product groups. Dynamic changes in intra-industry trade are shown by calculating marginal intra-industry trade indices. In addition to this, bilateral weighted adjusted intra-industry trade indices for Croatia and 24 most important trading partner countries are calculated in the period from 2001 to 2017. A panel-econometric analysis investigates the determinants of intra-industry trade in Croatia using a random effects model due to time-invariant characteristics of some determinants. The results of the analysis show that gross domestic product, common border, EU membership, and the distance between Croatia and trading partner countries have significant influence on the level of intra-industry trade in Croatia.

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

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

Sectorial adjustment costs induced by the Colombian pattern of international trade, 1991-2015

The objective of the paper is to analyze the adjustment costs induced by Colombia’s international trade pattern for the period 1991-2015. The methodology focuses on the calculation of marginal intra-industry trade indexes, the adjustment cost index and the use of the graphical tool known as the International Adjustment Cost Space. The data come from the Sistema Armonizado (Harmonized System) by the Departamento Administrativo Nacional de Estadística (National Administrative Department of Statistics), which reports the International Standard Industrial Classification at 4 digits. The main results are: (1) Economic sectors such as Substances and chemical products, plastic and rubber products, metal products, textiles and clothing, and wood products show lower adjustment costs, which is beneficial for Colombia because these are sectors with significant participation in the generation of employment and added value. (2) Trade in these sectors occupies important positions with countries with whom Colombia shares similar relative factor endowments such as Chile, Mexico, Brazil, Peru and Ecuador. Thus, increased intra-industry trade may lead to lower adjustment pressures on domestic factors of production.

Avrasya Ekonomik Birliği Pazarında Kazakistan'ın Rekabet Gücü

The paper basically explores the competitiveness of the industries of Kazakhstan in the Eurasian Economic Union Market by employing different trade measures such as the Balassa’s Revealed Comparative Advantage Index (RCA), Vollrath’s Revealed Competitiveness Index, and Brülhart B Marginal Intra-Industry Trade Index. The main drawback of the existing empirical literature is that various RCA indices are widely used to explain the competitiveness of a country. This paper however not only focuses on various RCA indices but some additional and complementary measures of competitiveness are also applied since they underline different aspects/dimensions of competitiveness.

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

Marginal Intra-Industry Trade and Adjustment Costs: The Australian Experience

The objective of this research is to investigate labour market adjustment associated with changes in Australia’s trade pattern over the period 1992-2000. Specifically the focus is on the so-called smooth adjustment hypothesis (SAH) which posits that, compared with inter-industry trade, intra-industry trade (IIT) expansion is associated with relatively lower factor adjustment costs. A dynamic panel data approach (GMM-System) is employed. We find that there is a negative correlation between changes in employment and increased IIT. This result provides support for the SAH. Given the rise in IIT as a proportion of Australia’s overall trade during the period under review, the adjustment in labour markets stemming from trade liberalisation at that time is likely to have been less than otherwise expected.

Labor Costs and Marginal Intra-Industry Trade: The Thailand Experience

Thailand’s international trade, exports in particular, expanded considerably after the major policy changes in 1990. According to this expansion, there was also a significant increase in intra-industry trade even though the major characteristic of Thailand trade is still inter-industry. However, intra-industry trade is hypothesized to reduce adjustment costs due to trade expansion and changes in trade compared to inter-industry trade. The main purpose of this paper is to examine the effects of increased Intra-Industry Trade (IIT) on the labor market adjustment cost, in view of the changes in Thailand’s pattern of trade over the post-1990 period. The study is focused on the hypothesis that Intra-Industry Trade (IIT) expansion entails lower factor adjustment costs (Smooth Adjustment Hypothesis-SAH). A dynamic panel data approach is employed. The results suggest a negative correlation between changes in employment and Marginal Intra-Industry Trade (MIIT) and confirmation of the SAH. Given the increase in IIT as a proportion of Thailand’s overall trade during the period under review, the adjustment in labor markets in the form of reduced employment from trade liberalization at that time is likely to have been less than that would have otherwise been expected.

Marginal Intra-Industry Trade and Adjustment Costs in Labour Market

The objective of this study is to provide some empirical evidences on the existence of labor market adjustments according to smooth adjustment hypothesis (SAH) under the impact of intra-industry trade (IIT) considering the Portuguese case over a time span between 1995 and 2006. The main methodological issue of this study consists in showing that it is preferable to use the GMM-System approach with orthogonal transformation of data. The key outcome consists in highlighting a negative linkage between marginal intra-industry trade and the amplitude of employment changes for this particular market. In addition, we find a negative correlation between changes of employment and changes in domestic consumption. Moreover, the relationship between growth of productivity and market structure is according to smooth adjustment hypothesis.

India's Marginal Intra-industry Trade in Selected Agricultural and Processed Food Products: The Likely Implications on Adjustment Costs and Food Security

The present study makes an attempt to analyse the structure of India's trade in agricultural products and its possible implications on resource adjustments and food security. As per the ‘Smooth Adjustment Hypothesis’ (SAH), trade integration as a consequence of Intra Industry Trade (the simultaneous export and import of goods from the same industry) would not lead to significant adjustment costs that take place with the displacement of resources from comparatively disadvantaged industries to export oriented industries, as in the case with inter industry trade patterns. If a country is experiencing an increase in inter-industry trade, the changes in exports and imports would be unmatched and as a result the resources will be reallocated from the contracting sectors to the expanding ones. The analysis of marginal intra-industry trade (MIIT) - a dynamic measure of intra industry trade - for selected agricultural and processed food products showed that the products mainly exhibits inter industry trade structure. The study also noted an emergence of new pattern of demand on tropical agricultural products in developed countries. The shift in cropping pattern from traditional to high valued crops that we see in this paper might be due to this shift in global demand. This shift in global demand was also reflected in the expansion of the exports of non-food crops from India to world market. The trade pattern in the form of inter-industry trade in general and the expansion of the exports of high valued crops and processed food products in particular might pose serious implications on the resource adjustments as well as food security.

Product Quality, Trade, and Adjustment: The China-ASEAN Experience

There is a fear among East Asian governments that China’s rapid export driven growth is significantly impairing the export performance of their own countries. The common belief among East Asian economies is that to remain competitive they must improve the quality of their exports relative to those of China. In this paper, we show how the emergence of China has affected the quality of its exports and imports to and from Malaysia, Singapore and Indonesia. Specifically, we combine a measure of marginal intra-industry trade (IIT) concerned with the adjustment implications of changes in matched trade, a measure of vertical and horizontal intra-industry trade concerned with the differences in product quality and a new dynamic measure of quality differentiated IIT. Our results suggest that Singapore and Malaysia have managed to maintain and even improve their position as the exporter of high quality varieties in bilateral trade with to China despite China’s rapid development and export orientated growth.

Marginal Intra-Industry Trade and Employment Reallocation: The Case Study of Iran’s Manufacturing Industries

The purpose of this paper is to test the smooth adjustment hypothesis by using panel technique for Iran’s manufacturing industries at the 4-digit aggregation level of ISIC classification, during time period 2001–2006. According to the smooth adjustment hypothesis, intra-industry trade expansion entails lower adjustment costs than inter-industry one. In this paper, by distinguishing marginal intra industry trade to its horizontal and vertical types and employing the total reallocation effect as a proxy of the adjustment cost of reallocation between sectors and occupations, we’ve tested smooth adjustment hypothesis for both marginal intra industry trade and its types. So, comparing with other empirical studies, this paper has used marginal vertical and horizontal intra industry trade as well as marginal intra industry trade to test the hypothesis. The obtained results do not support the hypothesis for marginal intra industry trade. On the other hand, by distinguishing marginal intra industry trade to marginal horizontal and vertical intra-industry trade, this hypothesis is expectedly confirmed. This result is justifiable since marginal horizontal intra industry trade is a change of intra industry trade with the similar factor intensity while marginal vertical intra industry trade is mainly based on the differences in factor endowment.

Marginal intra- industry trade and country characteristics

This study examines the marginal intra-industry trade (MIIT) and its components horizontally, and marginal vertical intra-industry trade (MVIIT) applied to the United States. We present an alternative methodology to evaluate marginal intra-industry trade (MIIT) which was presented by Thom and McDowell (1999) and Azhar and Elliot (2008). Using a panel data approach, the results show a negative correlation between endowments and marginal intra-industry trade. These results indicate that marginal intra-industry trade occurs more frequently among countries that have similar demand. Our results also confirm the hypothesis that trade increases if the transportation costs decrease. Key words: Marginal horizontal and vertical intra-industry trade, panel data.

Marginal intra-industry trade and adjustment costs: the case study of Iran s manufacturing industries

According to smooth adjustment hypothesis (SAH), intra-industry trade (IIT) has low adjustment cost compared with inter-industry trade. The purpose of this paper is to examine the hypothesis by using panel technique for Iran’s manufacturing industries during 2002–2006. Comparing with other empirical studies, this paper has used marginal horizontal and vertical IIT as well as marginal intra-industry trade (MIIT) to test SAH. The obtained results do not support the mentioned hypothesis for MIIT. On the other hand, by distinguishing MIIT to marginal horizontal and vertical IIT, this hypothesis is confirmed for the former. This result is justifiable since marginal horizontal IIT is a change of IIT with similar factor intensity, whereas marginal vertical IIT is mainly based on differences in factor endowment.

US manufacturing and vertical/horizontal intra-industry trade: examining the smooth adjustment hypothesis

Using data that represent the six-digit North American Industrial Classification System-classified industries that comprise the US manufacturing sector and that span the years 1989–2005, we test the validity of the smooth adjustment hypothesis (SAH). To our knowledge, this is the first examination of the SAH for the USA. The results of our empirical analysis are consistent with the confirmation of the SAH. Further, using measures of vertical marginal intra-industry trade and of horizontal marginal intra-industry trade, we find that the latter has a stronger effect on employment of production workers than does the former. The findings suggest that for total industry-level employment and for industry-level production worker employment, intra-industry trade expansion inherently involves lower adjustment costs as compared to interindustry trade expansion.

An analysis of India s bilateral intra-industry trade in agricultural products

This study attempts to analyse the extent of intra-industry trade (IIT) in India’s agricultural trade. This study showed that the agricultural trade between India and its two major trading partners, the USA and European Union, was mainly inter-industry in nature. However, there was a mild tendency for IIT to increase during the period of 2000–2008. The marginal intra-industry trade calculated for trade between both the partners indicated that the export was expanding at the cost of imports.

INTRA-INDUSTRY TRADE AND EXPORT SPECIALIZATION: LITHUANIAN CASE

This paper investigates the extent of intra-industry trade between Lithuania and the European Union and its role in export specialization. Lithuanian integration into the EU had an influence on the changes of intra-industry trade and export structure. The paper analyses the basic methods of intra-industry trade and export specialization measurement; the pattern of intra-industry trade between Lithuania and the EU, the influence of this form of trade on the changes of export structure. For measurement of Lithuanian intra-industry trade in the paper two approaches are adopted. The Grubel-Lloy index is used to calculate the intensity of intra-industry trade and thus to determine its relative importance compared to inter-industry trade. Secondly, the changes in trade over time are examined using an index of marginal intra-industry trade. Using these methods of measurement and Combined Nomenclature of commodities (CN) are calculated that Lithuania export specialization is based on similar goods with relatively different quality. It was determined that Lithuania has advantages in such CN groups as milk, fish products and other products. The EU has advantages in trade of product fruit, vegetables, coffee and other products.