Determinants of Vertical Intra-Industry Trade in the Automobile Manufacturing Sector: globalization and fragmentation

Nuno Leitão, Horácio Faustino () and Yushi Yoshida

No 2009/06, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: This paper examines the determinants of vertical intra-industry trade (VIIT) in the automobile components industry between Portugal and the European Union 27 (EU-27) and the BRIC countries (Brazil, Russia, India and China) during the period 1995-2006. Using a static and a dynamic panel data analysis, the results indicate that VIIT is a positive function of the difference in per-capita GDP between Portugal and its trading partners. Moreover, there is statistical evidence that geographical distance and proximity shared border influence this type of VIIT. Our results also confirm the hypothesis that trade increases if the transportation costs decrease and that there is a positive correlation between differences in endowments and VIIT.

Keywords: VIIT; intermediate goods; automobile manufacturing industry; panel data; fragmentation; globalization. (search for similar items in EconPapers)
JEL-codes: F14 (search for similar items in EconPapers)
Date: 2009-01
New Economics Papers: this item is included in nep-cwa and nep-int
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