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Intra-industry Trade in an Enlarged Europe : Trend of Intra-industry Trade in the European Union and its Determinants

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  • Yoo-Duk Kang

    (Korea Institute for International Economic Policy)

Abstract

In this paper I examine the evolution of intra-industry trade (IIT) in intra-European trade in the period of accession of the Central and Eastern European countries (CEEC). In order to identify changes in IIT in intra-European trade, I calculate the Grubel and Lloyd index for the static dimension and Brulhart A index for the dynamic dimension. Based on Grubel and Lloyd index, I conduct gravity-type empirical tests to verify determinants of IIT at the intra-European level. I find that CEECs experienced considerable increase in IIT, particularly during transitional periods before their accession. However, the level of IIT between CEECs is still considerably low. Given that a trade-investment nexus exists to explain IIT in intra-European trade, IIT in CEECs can increase further, as they receive more FDI from their neighbors.

Suggested Citation

  • Yoo-Duk Kang, 2010. "Intra-industry Trade in an Enlarged Europe : Trend of Intra-industry Trade in the European Union and its Determinants," Trade Working Papers 23110, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:tradew:23110
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    References listed on IDEAS

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    1. Gabrisch, Hubert, 2006. "Vertical Intra-industry Trade between EU and Accession Countries," IWH Discussion Papers 12/2006, Halle Institute for Economic Research (IWH).
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    6. Jose Caetano & Aurora Galego, 2007. "In Search for the Determinants of Intra-Industry Trade within an Enlarged Europe," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 5(2), pages 163-183.
    7. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(2), pages 430-447, May.
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    11. P. J. Lloyd, 2002. "Controversies Concerning Intra-Industry Trade," Palgrave Macmillan Books, in: P. J. Lloyd & Hyun-Hoon Lee (ed.), Frontiers of Research in Intra-Industry Trade, chapter 2, pages 13-30, Palgrave Macmillan.
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    Cited by:

    1. Kulbacki Michał & Michalczuk Adrian, 2021. "Regional trade integration in Central and Eastern Europe: State of play after 15 years of EU membership," Journal of Economics and Management, Sciendo, vol. 43(1), pages 225-250, May.
    2. Ambroziak Łukasz, 2016. "FDI and Intra-industry Trade in the Automotive Industry in the New EU Member States," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 52(1), pages 23-42, December.

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    More about this item

    Keywords

    Intra-industry trade; foreign direct investment; EU enlargement; European integration;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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