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INTRAINDUSTRY TRADE AND INNOVATION: An empirical study on the Colombian manufacturing industry* By

By Carlos Pombo

Abstract

This paper analyzes the theoretical and empirical relationship between intraindustry trade flows (IIT) in manufactures and technical change for the Colombian manufacturing industry during 1970-1995 period. A general estimating equation for sources of change of the equilibrium number of varieties, in which TFP growth is one of its components, is derived from the basic model of trade in differentiated good with monopolistic competition. Based on that relationship several estimations on the determinants of IIT flows are carried out. The econometric set up follows a panel data and cross section estimations of a system of simultaneous equation models (SEM). TFP and IIT indices are the endogenous variables of the system meanwhile industry characteristic, trade policy, and innovation-activity variables form the set of exogenous instruments. In addition, the paper presents a comparative analysis in the direction and trends of intraindustry trade flows in manufactures among the group of seven, Latin American free trade area members (LAFTA), and Colombia since 1970. __________________________________ * I am grateful with Werner Baer, Hadi Esfahani and Salim Rashid for their comments and suggestions. I also want to thank Maria Teresa Ramirez for her comments on previous drafts of this version. All reminder errors are by my own

Topics: An empirical study on the Colombian manufacturing industry
Year: 1998
OAI identifier: oai:CiteSeerX.psu:10.1.1.198.5458
Provided by: CiteSeerX
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