The Dynamics of International Trade Patterns

Abstract

This paper introduces new dynamic measures for examining changes in international trade patterns. Using data for 20 OECD countries over the 1980-2000 period, we show that inter-industry trade changes contrary to countries' previous specialization are frequently the dominant form of trade expansion. The econometric analysis indicates that the observed changes in trade patterns were explained by initial endowments of human-capital and industry-specific changes in labour productivity and labour costs. The results also suggest that trade liberalization induced an increase in the previous specialization of larger OECD economies in industries with increasing returns to scale. JEL no. F1, O33, O50

The Regional Assessment of Marginal Intra-Industry Specialization

“…The regional assessment of the marginal intra-industry specialization implied calculating the marginal intra-industry specialization (MIIT) index suggested by Brülhart (1994), which is in fact a Grubel and Lloyd type index that measures the dynamics of intra-industry specialization (Bastos P, Cabral M, 2007). The marginal intra-industry specialization index (MIIT), as well as the Grubel and Lloyd index, (Grubel H, Lloyd P, 1975), was calculated on the level of sections in the Combined Register (CR), thus quantifying the changes which come up in the intra-industry specialization processes on the level of each section.…”

The French (Trade) Revolution of 1860: Intra-Industry Trade and Smooth Adjustment

“…The methodology developed by Bastos and Cabral (2007) allows us to decompose changes in trade into the fraction of the change in trade accounted for by intra-industry trade. Such a "marginal" decomposition allows us to have an index of how much the changes in trade were accounted for by modern, intra-industry trade as opposed to growth in products where there is specialization (as measured by net exports).…”

“…We emphasize that these measures provide information on the margin and not about the levels. Bastos and Cabral (2007) "decompose the trade change into three different components: 'marginal intra-industry trade' (MIIT), inter-industry trade growth that contributes to an increase in a country's previous specialization (IPS), and inter-industry trade growth that contributes to a decrease in a country's previous specialization (SS)". For the first, define MIIT from Brülhart (1994) as Bastos and Cabral (2007) note that the portion of trade not allocated to marginal intraindustry trade can be classified in one of two ways as follows:…”

“…Our first dependent variable is MIIT. The second dependent variable is the difference between IPS and SS (IPS-SS) following Bastos and Cabral (2007). IPS-SS is larger when specialization in revealed comparative advantage goods increases.…”

“…We begin with an analysis of the 104 broad products listed in French official trade statistics. We decompose changes in imports and exports into intra-industry movements, increased specialization and loss of previous specializations using a technique due to Bastos and Cabral (2007). This decomposition establishes that increased intra-industry trade was paramount in the wake of liberalization.…”