A Systematic Decomposition of World Trade into Horizontal and Vertical IIT

Fontagné, Lionel; Freudenberg, Michael; Gaulier, Guillaume

doi:10.1007/s10290-006-0076-6

Cited by 69 publications

(46 citation statements)

References 14 publications

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“…We, therefore, also calculate lIT for international markets to proxy for market power S They decompose a Grubel-L1oyd index to disentangle vertical and horizontal lIT. Fontagne, Freudenberg and Gaulier (2006) Where PM; and PX j are developed country import penetration index and export penetration respectively, m; and X; are the value of total imports and exports for the industry, m~ and x~ are the value of imports and exports from and to developed countries, output; is the total domestic output in the industry in the UK.…”

Section: Computing Indicators 0/ Intra-industry Trade and Data Sourcesmentioning

confidence: 99%

Exchange Rates and Exports: Evidence from Manufacturing Firms in the UK

Zhang

2007

SSRN Journal

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The thesis exammes the effect of exchange rate variability on firms' export decisions, using data for UK manufacturing firms. We separately investigate the relationship between the changes of level of exchange rate and exports and that between exchange rate uncertainty and exports. Our results show that export extensive margin is not significantly related to changes in the level of exchange rates, whereas exchange rates have a significant and negative impact on the export intensity. Since industry heterogeneity is important in the effect of exchange rate level changes, we further explore possible explanations. In particular, we test whether external orientation and market structure play a role in the effect. Our results provide significant evidence for the role of external orientation and market structure. We also find significant evidence for the hysteresis effect of exchange rate uncertainty on exports, using new measures of uncertainty. In both cases, the behaviour of multinationals is investigated. We find that multinationals are less likely to be negatively affected by both changes of level of exchange rate and exchange rate uncertainty than indigenous firms.It contributes to the micro econometric literature in several aspects. Our evidence for industry heterogeneity from UK firm level data is new. Our explanations for industry heterogeneity by testing two hypotheses are the first attempt to investigate the factors driving different effects across industries. New measures of exchange rate uncertainty and related new method are used to test the hypothesis of hysteresis effects of uncertainty on trade. The use of micro data and new measures enable us to overcome the econometric difficulties and problems in previous studies. We also investigate whether multinationals' export behaviour is different from that of indigenous firms in response to exchange rate fluctuations. As far as we know, the multinationals' ability to deal with currency risk has never been examined before. The thesis provides new evidence for the multinationals' advantage of internalising currency risk over indigenous firms under exchange rate movements. II AcknowledgementsI would like to express my gratitude to all those who helped me in completing this thesis. I am deeply indebted to my supervisors Professor David Greenaway and Dr.Richard Kneller for their stimulating suggestions, guidance and encouragement throughout my PhD study. They generously spent their time, energy and insights to help me find this interesting topic and shape my understanding of it. I also wish to thank Sue Berry for her friendly and efficient assistance in organizing those fortnightly supervision meetings over more than three years.

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Section: Computing Indicators 0/ Intra-industry Trade and Data Sourcesmentioning

confidence: 99%

Exchange Rates and Exports: Evidence from Manufacturing Firms in the UK

Zhang

2007

SSRN Journal

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“…HIIT is characterized by trade in products that are close substitutes for one another but differ in characteristics; VIIT on the other hand consists of trade in products that differ in quality level (Greenaway and Torstensson, 1997). The predominance of VIIT in IIT is well known (Fontagné et al, 2006).…”

Section: Introductionmentioning

confidence: 99%

Vertical intra-industry trade and product quality: the case of South Korea, 1996–2003

Kang

Lee

2012

Econom. bus. letters

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This paper contributes to empirical research of intra-industry trade, especially vertical intraindustry trade (VIIT), by two aspects. Firstly, we separate VIIT into higher-export-price VIIT and lower-export-price VIIT. Secondly, we give attention to R&D and FDI stock in explaining VIIT determinants. Applied to panel data representing South Korea's bilateral trade with 15 OECD countries and Taiwan from 1996 through 2003, this alternative makes an intricate understanding of the VIIT determinants possible. Main empirical findings are that South Korea's R&D investments focus on price competitiveness while its inward FDI seeks efficiency and its outward FDI seeks a market in this period.

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“…As in previous work, horizontal and vertical IIT are disentangled using information on unit values for highly disaggregated data, on the plausible assumption that differences in unit values reflect differences in product quality. Fontagné et al (2006) offer a rich analysis of the data. It shows that most IIT is still in bilateral trade between OECD country pairs and most of this is in vertical IIT.…”

Section: Horizontal and Vertical Intra-industry Tradementioning

confidence: 99%