Tag: intra-industry trade

International trade theory suggests that advanced trade integration may lead to higher levels of intra-industry trade (IIT). The enlargement of the European Union (EU) during last decade is as a good example for which to analyse the IIT in agri-food products. The aim of the paper is to analyse the pattern and drivers of horizontal IIT within the EU between 1999 and 2010. Previous empirical studies fail to provide an exact link between the theory and the data. Thus, a new empirical strategy developed to test the predictions of Helpman and Krugman (1985) model is employed. At the country level, Belgium, France, Netherlands and Germany report the highest levels of IIT within the EU. The calculations mainly support Cieslik’s (2005) proposal to find the missing link between empirics and theory of IIT. In addition, the results are robust to alternative subsamples.

The article analyses country- and industry-specific determinants of horizontal and vertical intra-industry trade (IIT) in agri-food products between the Visegrad countries (Czech Republic, Hungary, Poland and Slovak Republic) and the European Union in the period 1999-2013. The results show that IIT is mainly of a vertical nature in the Visegrad countries, though the majority of their exports consist of low quality/value-added agri-food products to European markets. The results obtained by generalised method of moments (GMM) panel model estimations suggest that factor endowments and distance are mainly negatively related to IIT, while product differentiation was found not to foster two-way trade of quality-differentiated goods. All model runs show a negative relationship between productivity as well as foreign direct investment and IIT.