Skip to main content
Article thumbnail
Location of Repository

Do Endowments Matter for Vertical Intra-Industry Trade with Emergent Countries? Empirical Evidence for Spain

By J. Milgram-Baleix and Ana I. Moro-Egido

Abstract

In this paper, we study the nature of Spanish intra-industry trade and find that intra-industry trade with CEEC, Asian and Mediterranean countries has increased considerably since the middle of the Nineties. The second aim of the paper is to study if the comparative advantage argument also explains the vertical intra-industry trade between countries with different income levels. To this end we build physical, technological and human capital stocks for a large sample of countries. Results obtained with the panel techniques support the idea of a neo Ricardian explanation of vertical intra-industry trade rather than the neo-Hecksher-Ohlin explanation for intra-industry trade with emergent countries. Furthermore, our results suggest that the variables considered, mostly country-specific better explain vertical intra-industry trade than horizontal intra-industry trade. Results obtained with the Heckman method support the idea that intra-industry trade is more likely to occur with emergent countries with higher income per capita and with OECD countries that have a more similar level of income to that of Spain. Differences in endowments play an important role to determine the volume of intra-industry trade rather than the probability of intra-industry trade to occur. An additional contribution of this paper is to demonstrate that panel approach allows for more robust conclusions than OLS estimations when explaining intra-industry trade. The Heckman procedure to account for the zero flows also represents a major improvement respect to the standard approachIntra-industry trade; Comparative Advantage, Spain, Vertical Differentiation, Panel data, Truncated models.

OAI identifier:

Suggested articles

Citations

  1. (2001). A Two-Sta g eA n a l y s i so fM o n o p o l i s t i cC o m p e t i -tion Models of Intra-Industry Trade”
  2. (1998). Commerce international et structures de marché: une vérification empirique”
  3. (1981). Commercial Policy and Intra-Industry Trade”
  4. (1979). Increasing Returns, Monopolistic Competition, and International Trade,
  5. (1981). International Trade in the Presence of Product Differentiation,
  6. (2004). Intra-industry Trade by Types: What can we learn from Portuguese Data?’ Review of World Economic,
  7. (1980). Intra-industry trade under Perfect Monopolistic
  8. (1975). Intra-Industry Trade,
  9. (1997). Intra-industry trade: methodological issues reconsidered” CEPII Working Paper 97-01.
  10. (1985). Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition and International Economy,
  11. (1984). Natural oligopolies and International Trade in Monopolistic Competition and International Trade by H. Kierzkowski,
  12. (1983). On the Measurement of Intra-Industry Trade. T h eE c o n o m i cJ o u r n a l93(372):
  13. (1987). Product Quality, Intra-Industry Trade and (Im)Perfect Competition”
  14. (1986). Réexamen de la définition et mesure des échanges croisés de produits similaires entre les nations” Revue Économique 1,
  15. (2000). The Nature and Causes of Intra-Industry Trade: Back to the Comparative Advantage Explanation? The Case of Spain”
  16. (2002). The role of Comparative Advantage in Trade within Industries: A Panel Data Approach for European Union”
  17. (1994). The role of Human Capital in Economic Development: Evidence from Aggregate Cross-Country Data.
  18. (1999). Two-way Trade between Unequal Partners: The EU and the Developing Countries” Weltwirtschaftliches Archiv.
  19. (1995). Vertical and Horizontal IntraIndustry Trade: a Cross-Industry Analysis for the United Kingdom”
  20. (2002). Vertical Specialization and Intra-Industry Trade: The role of Factor Endowments”

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.