Intra-industry Trade in an Enlarged Europe: Trend of Intra-industry Trade in the European Union and its Determinants

Yoo-Duk Kang
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Yoo-Duk Kang: Korea Institute for International Economic Policy

Trade Working Papers from East Asian Bureau of Economic Research

Abstract: In this paper I examine the evolution of intra-industry trade (IIT) in intra-European trade in the period of accession of the Central and Eastern European countries (CEEC). In order to identify changes in IIT in intra-European trade, I calculate the Grubel and Lloyd index for the static dimension and Brulhart A index for the dynamic dimension. Based on Grubel and Lloyd index, I conduct gravity-type empirical tests to verify determinants of IIT at the intra-European level. I find that CEECs experienced considerable increase in IIT, particularly during transitional periods before their accession. However, the level of IIT between CEECs is still considerably low. Given that a trade-investment nexus exists to explain IIT in intra-European trade, IIT in CEECs can increase further, as they receive more FDI from their neighbors.

Keywords: Intra-industry trade; foreign direct investment; EU enlargement; European integration (search for similar items in EconPapers)
JEL-codes: F14 F15 (search for similar items in EconPapers)
Date: 2010-01
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Citations: View citations in EconPapers (2)

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