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Measures of Intra‐Industry Trade as Indicators of Factor Market Disruption

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  • PETER B. DIXON
  • JAYANT MENON

Abstract

Concepts of intra‐industry trade (IIT) are often used to indicate the extent to which trade growth is accommodated without factor market disruption. The most common indicators are movements in Grubel‐Lloyd indexes. However, these are sometimes misleading. We develop two other indicators. The first involves changes in IIT. While this provides a measure of the contribution of ITT growth to trade growth, it can over‐estimate the contribution of non‐disruptive trade growth. This problem is overcome by our second indicator, the contribution of dynamic intra‐industry trade or matched changes in trade. All three indicators are illustrated with Australian manufacturing data.

Suggested Citation

  • Peter B. Dixon & Jayant Menon, 1997. "Measures of Intra‐Industry Trade as Indicators of Factor Market Disruption," The Economic Record, The Economic Society of Australia, vol. 73(222), pages 233-247, September.
  • Handle: RePEc:bla:ecorec:v:73:y:1997:i:222:p:233-247
    DOI: 10.1111/j.1475-4932.1997.tb00996.x
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    1. Jayant Menon & Peter B. Dixon, 1994. "How Important is Intra-Industry Trade in Australia's Rapid Trade Growth?," Centre of Policy Studies/IMPACT Centre Working Papers g-110, Victoria University, Centre of Policy Studies/IMPACT Centre.
    2. Pomfret, Richard, 1985. "Categorical Aggregation and International Trade: A Comment," Economic Journal, Royal Economic Society, vol. 95(378), pages 483-485, June.
    3. Caves, Richard E, 1981. "Intra-Industry Trade and Market Structure in the Industrial Countries," Oxford Economic Papers, Oxford University Press, vol. 33(2), pages 203-223, July.
    4. Clive Hamilton & Paul Kniest, 1991. "Trade liberalisation, structural adjustment and intra-industry trade: A note," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(2), pages 356-367, June.
    5. Greenaway, David & Milner, Chris R, 1983. "On the Measurement of Intra-Industry Trade," Economic Journal, Royal Economic Society, vol. 93(372), pages 900-908, December.
    6. Finger, J M, 1975. "Trade Overlap and Intra-Industry Trade," Economic Inquiry, Western Economic Association International, vol. 13(4), pages 581-589, December.
    7. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-973, October.
    8. Jayant Menon & Peter Dixon, 1996. "How important is intra-industry trade in trade growth?," Open Economies Review, Springer, vol. 7(2), pages 161-175, April.
    9. Jayant Menon, 1994. "Trade Liberalisation, Closer Economic Relations and Intra‐Industry Specialisation," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 27(2), pages 31-42, April.
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    Cited by:

    1. Faruk Aydin & Hulya Saygili & Mesut Saygili & Gokhan Yilmaz, 2010. "Dis Ticarette Kuresel Egilimler ve Turkiye Ekonomisi," Working Papers 1001, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    2. Abdul K. M. Azhar & Robert J. R. Elliott, 2008. "On the Measurement of Changes in Product Quality in Marginal Intra-Industry Trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(2), pages 225-247, July.
    3. Abdul Azhar & Robert Elliott, 2003. "On the measurement of trade-induced adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 139(3), pages 419-439, September.
    4. David Greenaway & Michelle Haynes & Chris Milner, 2002. "Adjustment, employment characteristics and intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(2), pages 254-276, June.
    5. Jayant Menon & Peter Dixon, 1996. "How important is intra-industry trade in trade growth?," Open Economies Review, Springer, vol. 7(2), pages 161-175, April.
    6. Unknown, 2005. "Trends in Australian Agriculture," Commission Research Papers 31903, Productivity Commission.
    7. Productivity Commission, 2005. "Trends in Australian Agriculture," Research Papers 0502, Productivity Commission, Government of Australia.
    8. A K M Azhar & R J R Elliott, 2003. "Economic Integration and the Evolution of Trade: A Geometric Interpretation," Economics Discussion Paper Series 0308, Economics, The University of Manchester.
    9. Martina BLAŠKOVà & Filip ŠKULTÉTY, 2015. "U.S. intra-industry trade in air transport services: measurement and results," Transport Problems, Silesian University of Technology, Faculty of Transport, vol. 10(2), pages 15-22, June.
    10. Houston Davis & Brian Noland, 2003. "Understanding Human Capital Through Multiple Disciplines: The Educational Needs Index," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 61(2), pages 147-174, February.
    11. Jayant Menon, 1996. "How Reliable are Intra-Industry Trade Measures as Indicators of Adjustment Costs?," Centre of Policy Studies/IMPACT Centre Working Papers g-119, Victoria University, Centre of Policy Studies/IMPACT Centre.

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    More about this item

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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