Measures of Intra-Industry Trade as Indicators of Factor Market Disruption

Peter B. Dixon and Jayant Menon

No 266373, Center of Policy Studies (COPS) Impact Project Papers from Monash University Center of Policy Studies

Abstract: Intra-industry trade (IIT) related concepts have often been used as indicators of the extent to which trade growth can be accommodated without factor market disruption. The most commonly used indicators have been movements in the Grubel-Lloyd (GL) index. However, GL-based indicators are sometimes misleading and, at best, they give qualitative information only. We develop two other indicators. The first involves computing changes in LIT. While this method provides a precise measure of the contribution of growth in LIT to total trade (TT) growth, it tends to overestimate the contribution of non-disruptive trade growth. This problem is overcome by our second indicator, dynamic intra-industry trade or matched changes in trade. All our indicators .are illustrated with data for 133 Australian manufacturing industries.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 16
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Persistent link: https://EconPapers.repec.org/RePEc:ags:copspp:266373

DOI: 10.22004/ag.econ.266373

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