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The paper discusses whether "enlargement fatigue," slowing down the European Union integration process of 6 Candidate Countries (C6), can be explained by the poor economic and trade performance of those economies, especially in trading with the EU. We comprehensively analyzed the merchandise trade of those economies with the EU in 2007–2018 using numerous quantitative techniques and applying a very high level of data disaggregation. First, the value of similarity indicators between the C6's export and EU import structures and indices of intra-industry trade was calculated. Then we controlled for additional factors: the changes in C6's exports (imports) to the EU through shares of goods at higher levels of processing, as well as their export (import) specialization. The conclusion is that the weak trade performances of C6 are not the cause of enlargement fatigue, as these economies saw moderate structural improvements in their trade with the EU. [ABSTRACT FROM AUTHOR]

This study analyzes the impacts of imitation ability on major ASEAN countries' horizontal and vertical intra-industry trade for the period 2006–2016. The unique features of this study are twofold. Firstly, we develop a new composite index of imitation ability based on broad coverage of various components. Secondly, we consider the differential impacts of imitation ability on ASEAN countries' intra-industry trade with partner countries grouped by their levels of economic development. We found that ASEAN countries' imitation ability positively impacts the extent of their horizontal and vertical intra-industry trade globally. However, the impact of imitation ability on ASEAN countries' HIIT is the highest in their trade with middle-income countries. In contrast, the effect of imitation ability on ASEAN countries' VIIT is the strongest in their trade with high-income countries. [ABSTRACT FROM AUTHOR]

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. [ABSTRACT FROM AUTHOR]

Most of the empirical studies in the literature on intra-industry trade are conducted at the country level. Countries, however, differ in terms of granularity and internal heterogeneity. In the present study we empirically identify the determinants of the overall IIT as well as its horizontal and vertical components in the trade of Spanish and Polish NUTS-2 regions with all existing trade partners over the period 2005–2014. In order to obtain unbiased results, we utilize a semi-mixed effect model, estimated with the PPML method. We estimate the models jointly for all Spanish and Polish regions and then disjointly in a comparative manner – in order to identify incongruities of reaction to the various factors investigated. These include both traditional factors and a number of unorthodox factors such as regional path dependence, quality of regional institutions, the core or peripheral status of the reporting region. [ABSTRACT FROM AUTHOR]

This paper presents an exploration of the migration-trade nexus taking the case of Italy by crossing the two dimensions of migration (immigration and emigration) and the two dimensions of intra-industry trade (vertical and horizontal). This empirical strategy proves useful in refining interpretation of econometric results. In general, we find that both immigration and emigration are positively and significantly related to intra-industry trade. However, the magnitude and the statistical significance of the impact of migration on trade vary, depending on the type of trade flows considered (vertical or horizontal), the direction of migration (immigration or emigration) and the partner countries considered (OECD or non-OECD). In particular, we find that immigrants from non-OECD countries have a positive and significant impact on both 'variety trade' and 'quality trade', while immigrants from OECD countries significantly affect 'variety trade' only. Emigrants to non-OECD countries have positive effect only on 'variety trade'. These findings are largely consistent with predictions deriving from theoretical models of intra-industry trade and from the literature on migration-trade nexus. [ABSTRACT FROM AUTHOR]

In this article, we empirically investigate the role of global production chains (GPCs) in export survival by using highly disaggregated machinery exports data from Turkey for the period 1998-2013. We contribute to the literature by offering alternative indicators adopted from intra-industry trade to represent more effectively the extent of GPC in a survival analysis. Based on the estimation of a discrete-time logit model with random effects, we find that GPCs have a strong positive influence on the survival probability of Turkey's machinery exports. This impact is even stronger if trade involves vertically differentiated trade and parts and components in particular. [ABSTRACT FROM AUTHOR]

There 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. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between the United Kingdom's (hereafter referred as UK) bilateral intra-industry trade (IIT) and foreign intellectual property rights (IPRs) protections. The empirical investigation is based on pooled UK data and benefits from the theoretical distinction between horizontal and vertical IIT. It also estimates a gravity equation for international trade using both fixed and random effects models. We then extend the analysis by employing the GMM system for dynamic panel models. The principal findings suggest that the UK's IIT is stimulated when the level of a trading partner's IPRs and its imitative ability are considered jointly. However, when IPRs and imitation abilities are considered separately, their disparate effects are not an important factor in determining UK IIT flows. [ABSTRACT FROM AUTHOR]

The paper analyses complex interactions between intra-industry trade (IIT) and environment by extending Krugman's model of monopolistic competition and trade. It is found that an increase in exogenous environmental tax by a country leads to a fall in its output (the scale effect) and aggregate pollution, and an increase in its number of varieties (the selection effect). With IIT, if Home is a net exporter, an increase in its environmental stringency leads to a negative scale effect, which reduces its export demand and raises its import demand. In contrast, a positive selection effect reduces its import demand. However, the first-order scale effect on exports dominates the second-order effect on imports, implying a rise in Home's share of IIT with Foreign. The opposite holds true when Home is a net importer. Furthermore, the impact of a rise in environmental tax on aggregate welfare comprises the following counteracting effects: a negative scale effect, a positive selection effect, a lower level of aggregate pollution and a higher environmental tax revenue in autarky, and two additional effects, namely, changes in the level of exports and imports, under free trade. The overall change in aggregate welfare, in both autarky and free trade, is in general ambiguous. [ABSTRACT FROM AUTHOR]

This article suggests that the much trumpeted US trade deficit with Mexico is only an accounting matter concealing the real story behind the transactions between these two countries and Canada. The statistical exercise performed here shows that the deficit has not made Mexico a net winner from NAFTA. On the contrary, Mexico has had a progressive deterioration of its competitiveness with respect to its exports. The deficit in a trading scheme such as NAFTA is especially healthy for the US because it reflects the proper functioning of the intra-industry trade that is performed by its big companies. [ABSTRACT FROM AUTHOR]

This article contributes to the literature by using newly released comprehensive transaction-level data on all exports and imports to document facts about the amount ofintra-good trade– the simultaneous export and import of identical goods by one firm – in Germany. Combined data for trade transactions and for characteristics of a representative large sample of trading firms are then used to report differences between firms that export and import different goods only (inter-good traders) and firms that engage in the simultaneous export and import of identical goods (intra-good traders). We find that the share of intra-good trade in total trade was some 17% in Germany in 2012. Intra-good trade matters. This share differs widely between broadly defined groups of goods and between industries. Controlling for detailed industry affiliation, intra-good traders differ significantly from inter-good traders – they are larger, more human capital intensive, more productive, have a higher R&D intensity and are more profitable. The data, however, are not rich enough to reveal the direction of causality between intra-good trade and firm performance and to investigate empirically the reasons why some firms engage in intra-good trade. [ABSTRACT FROM PUBLISHER]

According to the popular Heckscher-Ohlin model of international trade, a country is expected to export (import) those products whose production requires the intensive use of the factor of production that is in relative abundance (scarcity). Leontief (1953), using input-output data of the US economy for the year 1947, found that the US, an overwhelmingly capital-abundant country, exported labour-intensive products and imported capital-intensive ones. Clearly, the results contradicted the predictions of the Heckscher-Ohlin model and they were characterised as 'Leontief's paradox'. A number of explanations for the so-called paradox were offered and this paper briefly, but critically, evaluates these explanations as it examines whether or not Leontief's results persist in the case of the US economy during the period 1998-2012. [ABSTRACT FROM AUTHOR]

This article offers empirical evidence on the major trends in the nature of Russia's trade and on the determinants of the different types of trade: horizontal intra-industry trade (HIIT), vertical intra-industry trade (VIIT) and inter-industry trade (INT). The estimation results of gravity-type log-linear models suggest that the combined economic size of Russia and the trading partner has a positive effect, while the distance between the two countries has a negative effect for all types of trade. They also suggest that FDI has a significant effect on all types of trade; however, the effect varies according to whether the partner country is a member of the CIS/CU or not, and whether the FDI is outward or inward. [ABSTRACT FROM AUTHOR]

Why are industries highly active in some battles over international trade policies, but in other instances, individual firms are highly active and industry groups are subdued? I argue that rising intra-industry trade in the postwar period has undermined traditional trade coalitions and created new opportunities for individual firms to become politically active. Drawing on new trade theories from economics, as well as work on firm heterogeneity and lobbying, I argue that industry associations become less active as intra-industry trade increases due to competing trade preferences among member firms. At the same time, individual firms become more politically active. My results suggest that firms lobby not only for protection, but liberalization. Using data on lobbying expenditures in the USA, my work takes recent analyses of intra-industry trade and lobbying a step further. I show how intra-industry trade redraws domestic political alignments and changes the composition of societal coalitions organized to influence trade policy. [ABSTRACT FROM PUBLISHER]

The paper analyzes the effects of four regional integration agreements (Common Market of the South [MERCOSUR], Andean Community [ANCOM], Central American Common Market [CACM] and North America Free Trade Agreement [NAFTA]) on bilateral trade in 19 countries from the Western Hemisphere for the period 1970–2014. For this purpose we estimate different gravity models to control for trade creation and diversion, export diversification and intra-industry trade using OLS log-linearized gravity model and Poisson pseudo-maximum-likelihood panel data estimators that allow controlling for zero-value trade flows. We find trade creation for ANCOM, MERCOSUR and CACM and trade diversion for NAFTA and MERCOSUR countries. Export diversification negatively affects bilateral trade in all American agreements, while intra-industry trade has contributed to trade expansion in ANCOM and the opposite for NAFTA, MERCOSUR and CACM. Global supply chains may help us explain these results. Finally, we find anticipatory effects on trade several years before the signing of the agreements, but only NAFTA countries seem to be natural trading partners in the region while the rest of Latin American regional agreements have not resulted in a comprehensive, profound and consolidated common market. [ABSTRACT FROM AUTHOR]

Thailand's automotive industry has evolved from a small import-substituting industry to a vibrant exporting one. It has contributed significantly and increasingly to the economy and intra-industry trade in Southeast Asia. The country also has experienced ‘qualitative’ change from simple production to technologically sophisticated activities. The evidence amassed illustrates that firm strategy and collaboration with other actors in the national innovation system were the most important drivers of technological upgrading in the industry. Local automotive part suppliers in particular had to become ‘active’ learners by collaborating with other partners beyond their own multinational buyers to compete in export markets. [ABSTRACT FROM AUTHOR]

Empirical investigation (Nowaket al., 2012) points out that vertical intra-industry trade (VIIT) in Europe is the dominant type of intra-industry trade (IIT) in the tourism sector. This article is the first in tourism literature to test separately the determinants of vertically and horizontally differentiated services, using the most recent models in the theory of IIT. We examine bilateral trade among all trading partners of the sample of European countries, covering the period from 2000 to 2008. We show that differences in gross domestic productper capitaand the income-distribution overlap, as well as cultural proximity, are the most significant driving forces behind VIIT for European countries. Geographic distance has a negative effect, whereas specific tourism endowments and relative size of the economies are less conclusive. These results confirm theory predictions and most of the empirical findings related to the pattern of VIIT for the manufacturing sector. As expected, we find that determinants of VIIT cannot explain horizontal intra-industry trade in tourism. We suggest two alternative methods of estimation: generalized least squares logistic function and the fractional logit estimator. We conclude that there are common factors explaining IIT in the manufacturing and tourism trades. [ABSTRACT FROM PUBLISHER]

In young, innovative, and uncertain Schumpeterian environments, a pivotal way to achieve growth for the firm is the entry into a niche that forms part of the same industry. Given the fast-moving and competitive nature of Schumpeterian settings, we turn to firms' technological investment decisions, implied by the innovation management stream of literature, to study the ability of a firm to adopt an intra-industry diversification strategy. Empirical evidence from the encryption software industry demonstrates that patents and strategic technology alliances, two specific technological projects, positively influence intra-industry diversification. In a further inquiry, we find that when firms activate patents and strategic technology alliances simultaneously, the benefit of this technological portfolio on intra-industry diversification can be captured in more uncertain business environments. [ABSTRACT FROM AUTHOR]

The article offers information on the renegotiation of the North American Free Trade Agreement (NAFTA) between U.S. President Donald Trump Canadian Prime Minister Justin Trudeau. Topics discussed include the contribution of NAFTA towards the global gross domestic product (GDP), the impact of the NAFTA on the two-way trade between the U.S. and Canada, and the impact that tariffs will have on the Canadian GDP.

This paper uses a computable model of trade to forecast the effects of the US–Korea free trade agreement on the manufacturing sector. The model uses the Eaton–Kortum methodology to explain intra-industry trade instead of the usual Armington assumption. It is parameterized using 2005 data for 15 industries and 53 countries. The results show that implementing KORUS would increase the US manufacturing exports to Korea by 56.9% and Korean manufacturing exports to the US by 18.9%. It would also increase manufacturing employment by 26,500 jobs in Korea and 34,200 jobs in the US. In addition, KORUS would lead to significant changes in the patterns of trade and production. The US and Korea would increase their specialization in the industries where they have strong technological comparative advantages. Finally, KORUS would increase welfare in both countries, but only modestly: by 0.27% in Korea and 0.013% in the US. [ABSTRACT FROM PUBLISHER]

This study examines shareholder wealth effects and intra-industry signals of consolidation announcements in the European financial sector over the period 2000 to 2006. Results show that announcements generate strong positive valuation effects for targets that become higher in cross-border and small value deals, and are negatively related to their relative size and prior performance. Evidence of acquirer returns is mixed depending on value size, geographic location and legal status of the deal, while returns of combined entities are mostly positive. Our findings provide preliminary evidence that European consolidation announcements transmit intra-industry signals that may encourage or discourage future takeover deals through the revaluation of other similar European financial institutions that are considered prospective targets ‘rival financial institutions’. [ABSTRACT FROM PUBLISHER]

Frictions in U.S.–China bilateral trade relations have intensified in recent years. Changes in intra-industry specialization indicators are used to assess factor adjustment pressures that may have been experienced by U.S. and Chinese industries from recent growth in bilateral trade. Many industries experienced large increases in intra-industry trade over the 2000–10 period. Only 14 of 62 U.S. industries may have experienced factor adjustment pressures. Most U.S. industries gained from growth in U.S.–China trade. Nine Chinese industries may have faced factor adjustment pressures. The United States should refrain from using trade remedy measures to address bilateral trade frictions and focus instead on improving trade relations. [ABSTRACT FROM PUBLISHER]

This paper investigates the relationship between intra-industry trade (IIT) expansion and labor market adjustment in Taiwan. We adopt a panel data set containing detailed employment information and utilize various measures of labor market adjustment to conduct empirical estimations. After controlling for industry-specific effects and occupational composition, the empirical results demonstrate that IIT expansion does have a smoothing effect on labor market adjustment. Moreover, industries with abundant skilled workers experience lower employment adjustment costs. [ABSTRACT FROM AUTHOR]

This paper develops a model of intermediate goods firms heterogeneity with respect to a pollution parameter to analyze the effects of intra-industry trade on final good output, pollution and welfare. By focusing on intra-industry trade we consider trade between similar countries. We analyze both trade between developed countries, and trade between developing countries. In our model, final good producers pay an environmental tax on the total pollution emitted in their country. Therefore, final good producers determine the overall level of pollution by demanding ‘cleaner’ or ‘dirtier’ intermediate goods. To focus on intra-industry trade we consider only intermediate goods firms trade. We analyze three scenarios: closed economy; open economy with no impediments to trade; and open economy with transportation cost. Our main findings are:i. a developing country closed to trade faces lower final good output and higher total pollution and is thus worse off than a developed country;ii. countries are better off under trade than under autarky, regardless of their development level; andiii. an open economy with low transportation costs are better off than an open economy with no impediments to trade. [ABSTRACT FROM PUBLISHER]

The relative importance of intra-industry or inter-industry knowledge spillovers for the growth of cities remains an open question. Using a unique data set on the growth of 109 British cities during 1951–1991, we find evidence suggesting that the most important knowledge spillovers occur between rather than within industries, which is consistent with Jacobs (1969, 1985). [ABSTRACT FROM AUTHOR]

This study investigates the patterns of innovation in Turkey and its primary aim is to examine the intra-industry heterogeneity in innovative activities. For this purpose double-level factor analysis is performed and the resulting factor scores are used in the subsequent cluster analyses. Four distinct innovation patterns, which may be interpreted as ingredients of different technological regimes, are identified. A taxonomy of innovative firms is also constructed by grouping firms according to their innovation characteristics and, to the authors’ knowledge, this is the first empirical classification study in Turkey. These results indicate that industries differ in terms of innovative activities. However, industries are not dominated by a single technological regime. On the contrary, five technological regimes were observed in almost all sectors. Building upon these facts, it can be speculated that sector-specific conditions determine the extent of intra-industry heterogeneity. [ABSTRACT FROM AUTHOR]

The article presents an analysis regarding the bilateral trade and trade frictions between Japan and China from 1972-2012. It states that the bilateral between the two contries has evolved to intra-industry trade from inter-industry trade. It adds that most of the trade disputes involved in Japan's exports to China since 1993 were raised by Japan.

While previous research has shown that industries with high-scale economies more frequently have low rather than high intra-industry trade shares, this study provides strong support for other predictions of modern trade models. Industries with high-scale economies more frequently have high rather than low export and import shares. A finding that high-scale economies is associated with low net export shares may be due to the role scale economies play in generating both high industry export and import shares. Theoretical and empirical studies should focus attention on relationships among scale economies, trade flows and net exports. [ABSTRACT FROM AUTHOR]

This paper examines the relation between price differences and quality differences in an oligopoly model with intra-industry trade, where goods are horizontally as well as vertically differentiated. The analysis demonstrates that the ratio of prices is not linked to the ratio of qualities in any simple way. The paper therefore questions empirical trade studies using unit values as an indicator for the quality of the traded goods. However, we also show that the ratio of prices is a reasonable proxy for the ratio of qualities if sunk cost is dominating in the cost structure. [ABSTRACT FROM PUBLISHER]

Sino-European trade relations have affected Europe's bilateral comparative advantages over time. The change in bilateral trade is compared to the overall development of European trade to highlight the features of China's structural change. China is shown to be increasingly specializing in technology-intensive goods. The changes in the European Union's trade with China are stronger than the changes in its overall trade pattern. Based on technologically intensive production, focus is placed on China's integration into the worldwide value-added chain since intra-industry trade has become more prevalent in bilateral trade relations with China. Consideration of research-intensive Schumpeter goods finds that trade expansion between 1999 and 2008 was, to a great extent, of the intra-industry type. This has important implications for labor market adjustment costs in different industries. [ABSTRACT FROM AUTHOR]

We examine the intra-industry effects associated with the acquisition of Dow Jones and Company by News Corporation. We test the significance of the market's reaction to news releases throughout 2007 using event study methods. We find evidence of a direct relation between the stock price reaction of Dow Jones and the stock price reaction of its competitors, indicating that the market viewed the acquisition as beneficial to Dow Jones's industry rivals. [ABSTRACT FROM AUTHOR]

This paper examines the effects of intra-industry imports on total factor productivity (TFP). Employing a new sample of 25 Mexican manufacturing industries with annual data from 1984 to 2000, interesting panel data results emerge. First, we find the positive impact of intra-industry imports on productivity to be substantially larger after NAFTA. Second, relatively labor-intensive industries have benefited the most from these spillovers. Third, these results are very robust to business cycle controls and estimation methods. Our findings suggest that the expansion of technology in differentiated products has increased the technology spillovers from the US and Canada into Mexico. [ABSTRACT FROM AUTHOR]

An increasingly important component of total world trade is intra-industry trade (IIT). The large volume of literature on IIT is reflective of this importance. However, this extensive literature has focused almost completely on explaining the causes of IIT. This focus has left a puzzling gap in the literature. Specifically, it is almost impossible to determine the level of IIT for a particular country or region. Further, there is almost no information on the level of IIT at the industry level either globally or for a region or country. In this article we provide estimates of IIT for the world and for the countries of the Western Hemisphere. Further, we provide estimates of IIT for ten different SITC product categories on the same basis. The findings of the article indicate that in most industries, IIT in Latin America is substantially lower overall than the world average. There are, however, substantial variations observed both by country and by industry. Because the results are the first available for the region as a whole, they should allow researchers to get a better picture of the extent of IIT in Latin America and the Caribbean by country and by industry. [ABSTRACT FROM AUTHOR]

This article evaluates the impact of bilateral trade integration on business cycle comovements of the U.S. by distinguishing intra-industry from inter-industry trade flows. We first discuss the conditions for different impacts of trade intensity on the output correlation of two trading partners. The patterns of output correlation between two economies are associated with their economic structures and the nature of economic shocks. Regression analysis with bilateral interstate trade data further confirms the conventional wisdom that business cycles are more synchronized between economies with deeper trade linkages. Disaggregate trade data further suggest that much of the observed effect from trade arises from intra-industry trade flows. There is scant evidence to support the conjecture that inter-industry trade, which likely raises sectoral specialization, causes divergence in business cycles. [ABSTRACT FROM AUTHOR]

We investigate the accuracy of trade statistics employing intra-industry trade analysis for 29 countries. We exploit the fact that country A's exports to country B are country B's imports from country A. The data published by the two sides can be compared with each other. Are A's or B's data more accurate? Our analysis is based on the average degree of 'similarity' between country A's and country B's data and the 'mirror' data of all the other countries in the sample. The ranking of the countries by the accuracy of their data yielded by our calculations mainly confirm our a priori expectations. We also investigate whether the data of 'good' reporting countries can be more trusted than some averages of the latter and the data reported by the 'bad' reporters. [ABSTRACT FROM AUTHOR]

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

This study identifies country and industry-level determinants of intra-industry trade and its components, vertical (VIIT) and horizontal (HIIT) intra-industry trade, in bilateral U.S. trade. Unlike studies for other countries, U.S. intra-industry trade is found to be dominated by HIIT rather than VIIT. This finding is important because HIIT tends to have relatively low factor adjustment costs relative to VIIT. Industry specialization takes place within, rather than across, product lines within the same industry. Two new variables contribute to our understanding of intra-industry trade. Country-level product differentiation and the interaction between technological innovation and foreign direct investment are found to be important determinants of both HIIT and VIIT. Distance, foreign direct investment flows, scale economies, and seller concentration affect HIIT but not VIIT. Other influences exert similar influences on components of intra-industry trade. [ABSTRACT FROM AUTHOR]

This paper tests the industry-specific hypothesis for Slovenia as a former party to the Central European Free Trade Agreement. The values of horizontal and vertical intra-industry trade (IIT) of the ninety chosen manufacturing activities represent the dependent variable, whereas product differentiation, economies of scale, market structure, and multinational enterprises represent independent variables. The results obtained from panel techniques find strong support for the effects of industry-specific determinants of vertical IIT. Manual labor intensity in production is a comparative advantage, whereas capital intensity in production is a disadvantage [ABSTRACT FROM AUTHOR]

This study investigates the features and determinants of the horizontal and vertical intra-industry trade (HIIT and VIIT, respectively) and firms' investment strategies of the information technology (IT) industry in the Asian, European Union (EU) and US markets from 1996 to 2005. The respective evolutions of the HIIT and VIIT of the IT industry indicate that HIIT has often dominated VIIT in the IT industry, which is obviously contrary to the present pattern of world trade. The empirical results further reveal the principal pattern of the IT firms' foreign direct investment strategies as facilitating the market rather than seeking efficiency in the host regions. The effect of revealed comparative advantage in relation to VIIT and HIIT demonstrates that vertical specialization is significant between Asia and the EU whereas horizontal specialization plays a key role between Asia and the US. The Asian financial crisis significantly promoted VIIT in regard to Asian IT firms in the US market. Finally, regional trade associations such as the EU and Association of South East Asian Nations (ASEAN) have strengthened the vertical specialization of EU IT firms in Asian countries. [ABSTRACT FROM AUTHOR]

This article addresses the importance of network trade between Malaysia and China and assesses the extent of product upgrading in components traded. The study brings to the fore the following points. First, China is emerging as an important market for component imports relative to component exports. As such, the increase in two-way flows of parts and components for/further processing and development, implying a shift away from assembly-end operations, remains insignificant. Secondly, network trade appears to have improved the quality of exports destined to China (reflecting a "moving up of the value chain"), but the gaps between the unit values of export and imports have narrowed in the recent past, implying less product development. [ABSTRACT FROM AUTHOR]

In this note, we examine how trade liberalization affects production structure in the presence of indirect network effects (hardware/software systems). For these purposes we construct a simple two-country model of trade with two incompatible hardware technologies. It is shown that, given that both types of hardware exist before trade liberalization, liberalization and increased intra-industry trade in software products may reduce the variety of hardware technology via intensified network effects. It is also shown that, contrary to the findings of previous studies on intra-industry trade, some consumers may become worse off as the result of trade. [ABSTRACT FROM AUTHOR]

Of the dearth of empirical studies on marginal intra-industry trade, there is a relative paucity of empirical evidence involving developing countries. The major contribution of this article is two-fold: Firstly, it measures to our knowledge for the first time the extent of Jamaica's marginal intra-industry trade with CARICOM. This study is warranted bearing in mind that Jamaica's involvement in recent integration efforts with CARICOM will have adjustment costs implications. Secondly, we compare the performance of various Jamaican export sectors with their CARICOM counterparts. The article concludes by proposing some recommendations for policy makers to ensure smoother functioning of the Jamaican labour market. [ABSTRACT FROM AUTHOR]

Using a database containing trade and industry variables of foreign-owned companies in the Polish manufacturing industry for the years 1993-2002, we investigate the relationship between the organizational structure of multinational enterprises (MNE) in Poland and the intra-industry trade of their affiliates (IIAT). We find labour intensity; scale economies and absorptive capacity of affiliates are the main explanatory variables for IIAT. Given the overall rise in export and import intensities of foreign affiliates over the period of investigation, our findings suggest that export-platform FDI has become a more important mode of organization for multinational enterprises as Poland has evolved into a relatively stable economic environment where MNEs feel comfortable basing their regional operations. [ABSTRACT FROM AUTHOR]

The ten new member states (NMS-10) of the European Union (EU) have contributed to an enhancement in the agro-food trade among the EU-25 members. Intra-industry trade (IIT) represents only a minor part of NMS-10 trade in agro-food products. Their trade in agro-food products is specialized to different countries in terms of economic distance, factor endowments and/or degree of competitiveness of their agro-food sectors. The borderless EU markets are likely to influence the increase of IIT with implications for the EU trade policy, since more than one-third of agro-food trade in the EU-25 members is represented by NMS-10. [ABSTRACT FROM AUTHOR]

While a large body of literature examines the environmental impact of trade on the environment, this discussion focuses largely on the context of inter-industry trade. Empirical evidence has long suggested that an increasing share of international trade takes the form of intra- rather than inter-industry trade. In an attempt to fill this gap, the present paper uses a price-setting duopoly model of intra-industry trade to highlight the environmental consequences of trade liberalization when oligopolistic rivalry rather than comparative advantage drives international trade. We find that the environmental impact of trade liberalization depends mostly on two factors, namely, on the nature of pollution (i.e. whether it is local, transboundary or global) and on which country liberalizes trade (i.e. whether it is the ‘clean’ country or the ‘dirty’ country). [ABSTRACT FROM AUTHOR]

This article examines the impact of income inequality on intra-industry trade (IIT) between North-South. The authors feel most of the current research on IIT issues has focused on North-North relationships employing a static framework. In their analysis they filter their data through the horizontal and vertical paradigm and indicate that the horizontal model is more applicable. They conclude that income inequality is a determinant of the relative growth in North-South IIT, consequently, growth would accelerate if inequality were reduced.

International trade in financial services is a topic of some importance both to the financial services sector itself and in international trade negotiations. Unfortunately, intrinsic problems in defining and measuring trade in services, combined with a lack of data in many countries, have made empirical analysis of trade in financial services difficult. Recent improvements in data, although still providing only a limited coverage, do now provide a basis for analysis. In this paper, we use data from the OECD International Trade in Services Statistics 2001 database to conduct an analysis of trade in financial services based on standard theories and empirical techniques for international trade. Our results suggest that the key concepts of international trade are of use in understanding international trade flows in financial services. In particular, we find evidence of significant volumes of intra-industry trade in financial services, as well as significant volumes of inter-industry trade for some countries, including the UK. Using Balassa's ‘revealed comparative advantage’ index, the most highly ranked countries are Belgium-Luxembourg, Italy, Switzerland, the UK, the USA and Greece. Using the ‘net export ratio’, the countries that are ranked highest include Germany, Switzerland, the UK, the USA and Belgium-Luxembourg. [ABSTRACT FROM AUTHOR]

Future membership of CEE countries in the euro zone highlights the risk of external asymmetric demand shocks due to too strong a dependence on one sector or one customer country. The purpose of this article is to build two indicators of exposure to shocks—sector-based and geographical—taking into account the symmetry of the export structures of a future member with the EMU and the trade openness of the future member. This enables us to draw up a classification of the CEE countries according to fulfillment of the Kenen criterion, revised and then transposed to the geographical variety of exports. The results, compared with those of the two countries in the EMU which are most sensitive to sector-based and geographical shocks (Finland and Ireland), testify to a generally pronounced exposure to shocks. An inventory of the pairs ‘country/branch’ and ‘country/destination’ liable to be at the origin of shocks with strong macroeconomic impact shows that Bulgaria and Slovakia, and to an even greater extent Estonia and Latvia, are exposed to major risks. In so far as Bulgaria and Latvia's real convergence process with the euro zone seems scarcely to have started, these two economies might consider postponing EMU membership or creating a cyclical stabilisation fund on joining. This recommendation contradicts the endogenous OCA theory, which is put forward when intra-industry trade intensifies. However, an increase in the share of intra-industry trade between a CEE country and the EMU does not necessarily entail less exposure to the shocks studied. [ABSTRACT FROM AUTHOR]

Measuring the level of competition in an industry is an empirical task with a lengthy history. Many of the traditional measures offer a snapshot of the industry, where the distribution of market share is examined at a given point in time. The purpose of this inquiry is to utilize a regime-switching model which highlights the importance of intra-industry movement. The empirical results suggest that even in an environment where the distribution of market share is improving, an industry can still be persistently dominated by the same collection of leading firms. [ABSTRACT FROM AUTHOR]

Openness to international competition can lead to enhanced resource allocation in the end. While factor reallocation is essential if net benefits are to be derived from trade liberalization, the process generates costs both for transitioning workers and for employers undergoing personnel turnover. Net welfare gains depend on adjustment costs. Understanding of these issues has been hampered by data limitations. In this paper, we overcome some of these limitations by using new, harmonized measures on job creation and destruction for a number of countries in Latin America. We use these new series to investigate the impact of the removal of protectionism on net employment and gross job reallocation in Latin America. We find a robust pattern showing that reductions in tariffs and exchange rate appreciations increase the pace of job reallocation within sectors. We also find, however, some evidence of declining net employment growth as trade exposure increases. For example, we find some evidence that in the wake of tariff reductions, there is lower net employment growth. [ABSTRACT FROM AUTHOR]