Patterns and determinants of the horizontal and vertical intra-industry trade of regions: panel analysis for Spain & Poland

Abstract

Most of the empirical studies in the literature on intra-industry trade and on the factors affecting trade are performed on the country level. Countries, however, differ in terms of granularity and internal heterogeneity at the regional level. This internal differentiation in terms of intra industry (IIT) patterns, which could affect countries' overall trade pattern, is thus not typically taken into account. In contrast, in the present study -using a unique dataset -we conduct an analysis at the level of NUTS2 regions of two large EU Member States (Poland and Spain) of similar size, level of development, a number of regions and the extent of international regional diversity. This allows drawing more thorough and robust conclusions, as regards the nature of IIT and its determinants. IIT is measured at the 4-digit level of products CN classification. We first describe the overall pattern of IIT for regions, and then empirically identify the determinants of overall IIT as well as its horizontal and vertical components in trade the Spanish and Polish NUTS-2 regions with all existing trade partners on bilateral basis over the period 2005-2014. In order to obtain unbiased results, we utilise a novel empirical approach -a semi-mixed effect model, estimated with the Poisson Pseudo Maximum Likelihood estimator.We estimate the models jointly for all Spanish and Polish regions and then disjointly in a comparative manner -in order to identify incongruities of reaction to various factors investigated. These include both traditional factors, postulated by the standard theoretical models, as well as a number of factors related to the regional dimension of our analysis such as regional path dependence, quality of regional institutions or the core or peripheral nature of reporting region. The study contributes significantly to the analysis of determinants of IIT. We go beyond the traditional approach to IIT analysis (focused on countries). By treating regions as small open economies, participating in international trade, we are able to show new, interesting aspects of IIT and its determinants.

The Relationship Between Indonesia’s Foreign Direct Investment and Bilateral Intra-Industry Trade with Japan, China, and ASEAN-9

“…Thus, the production cost will be lower. It is also consistent with research by Jambor & Leitão (2016) and Brodzicki et al (2020), who find that FDI and IIT are positively correlated. Sun (2001) asserts that the international division in labor and factor production mobility, such as technology and management, can happen when foreign investment is involved.…”

“…The difference of endowments and GDP per capita has a relationship to the low share of IIT too. It is also consistent with the studies by Cabral (2013), Phan & Jeong (2014), Łapińska (2016), Madeira (2016), Bagchi &Bhattacharyya (2019), andBrodzicki et al (2020). IIT is initially a trade between countries that are similar in competitiveness (Madeira, 2016).…”

Patterns and determinants of intra-industry trade in agri-food products between Bosnia and Herzegovina and CEFTA 2006

“…Furthermore, the ethnic similarity between the trading INTRA-INDUSTRY TRADE BETWEEN BOSNIA AND HERZEGOVINA AND CEFTA economies 12 significantly and positively affects their mutual IIT at the 1% significance level, as assumed in the hypothesis H8. The same key determinants of IIT were recently emphasised by the results of the study conducted by Brodzicki et al (2020).…”

Competencia oligopólica y comercio internacional: examinando la calidad de productos

“…Cuando los productos se distinguen por una calidad distinta, en este caso café gourmet vs café no-gourmet, se suele denominar diferenciación vertical de productos, en la literatura de la organización industrial (Pepall, Richards y Norman, 2014; Belleflamme y Peitz, 2010); y su comercio se denomina comercio intrasectorial vertical, en la literatura del comercio internacional (Brodzicki, Jurkiewicz, Márquez-Ramos y Stanislaw, 2020; Le Duc y Taegi, 2020; Ito y Okubo, 2012; Aturupane, Djankov y Hoekman, 1999; Greenaway, Hine y Milner, 1995). Cuando los productos se distinguen por atributos y variedades, y los consumidores poseen preferencias heterogéneas entre los productos aun cuando puedan poseer relativamente la misma calidad, en este caso, café de empaque rojo o de la marca A vs café de empaque azul o de la marca B, se denomina diferenciación horizontal de producto, en la literatura de la organización industrial (Pepall et al 2014; Belleflamme y Peitz, 2010); y su comercio se denomina comercio intrasectorial horizontal, en la literatura del comercio internacional (Brodzicki et al, 2020; Ito y Okubo, 2012; Aturupane et al, 1999y Greenaway et al, 1995.…”

“…La literatura empírica que trata de medir el comercio intrasectorial horizontal y vertical, utiliza estos dos marcos teóricos por separado, para justificar sus resultados (Brodzicki et al, 2020;Azhar y Elliott, 2006;Schott, 2004;Aturupane et al, 1999;Greenaway et al, 1995). Esto representa una limitante pues utilizan simultáneamente dos teorías que asumen diferentes tipos de competencia para explicar sus resultados empíricos, siendo que podrían estar ligados a un tipo específico de competencia.…”