Abstract:Recent developments in the literature on intra-industry trade (IIT) have remarked the importance of disentangling horizontal and vertical components in IIT. For example, Greenaway, Hine and Milner (GHM) have investigated the determinants of IIT in the UK and have shown that the approach which distinguishes vertical from horizontal IIT is worth pursuing in order to arrive at a more accurate interpretation of empirical evidence. This paper builds on GHM’s methodology whilst at the same time introducing some innovative features. The most significant is that the share of vertical differentiation in IIT is further divided into two components which are separately tested in the case of the UK: the part of vertical IIT composed of flows in which the quality of exports is higher than the quality of imports; the remaining part formed by flows in which exports appear to be downgraded in comparison with imports. This further distinction yields a more consistent specification of the expected relationship between the proxy variable for quality differentiation and vertical intra-industry trade. . Keywords: Intra-industry Trade; North-South Trade; Vertical Product Differentiation; UK Trade JEL-codes: F13 F14
"Empirical Explanation of vertical and horizontal intra-industry trade in the UK: a comment”
CELI, GIUSEPPE
2010-01-01
Abstract
Abstract:Recent developments in the literature on intra-industry trade (IIT) have remarked the importance of disentangling horizontal and vertical components in IIT. For example, Greenaway, Hine and Milner (GHM) have investigated the determinants of IIT in the UK and have shown that the approach which distinguishes vertical from horizontal IIT is worth pursuing in order to arrive at a more accurate interpretation of empirical evidence. This paper builds on GHM’s methodology whilst at the same time introducing some innovative features. The most significant is that the share of vertical differentiation in IIT is further divided into two components which are separately tested in the case of the UK: the part of vertical IIT composed of flows in which the quality of exports is higher than the quality of imports; the remaining part formed by flows in which exports appear to be downgraded in comparison with imports. This further distinction yields a more consistent specification of the expected relationship between the proxy variable for quality differentiation and vertical intra-industry trade. . Keywords: Intra-industry Trade; North-South Trade; Vertical Product Differentiation; UK Trade JEL-codes: F13 F14I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
