Fragmentation, Vertical Intra-Industry Trade, and Automobile components

Nuno Leitão, Horácio Faustino () and Yushi Yoshida

Economics Bulletin, 2010, vol. 30, issue 2, 1006-1015

Abstract: By analyzing vertical intra-industry trade (VIIT) within Portugal's automobile parts and components industry, this study adds new empirical evidence for the international fragmentation of the production process. For trade partner countries, we choose the EU countries, the BRICs, and the US during the period 1995 to 2005. From panel data analysis, the empirical evidence supports the notion that shorter geographical distance, dissimilar income levels, and dissimilar endowments between two economies lead to a higher VIIT of automobile components. In addition, our results also confirm the hypothesis that automobile (assembly) production in each country promotes higher VIIT of auto parts, while economic integration in the style of the European Union and similarity in culture do not magnify the VIIT of the parts and components industry. We conclude that income differences between trade partner countries are an important driver via the international fragmentation of production of a higher VIIT. However, a call for a geographically closer vertical linkage by the agglomeration effect for large domestic automobile production leads a firm to keep the entire production process within a country and may deter this income-difference effect

Keywords: Vertical intra-industry trade; Fragmentation; Panel data; Automobile components (search for similar items in EconPapers)
JEL-codes: C3 F1 (search for similar items in EconPapers)
Date: 2010-04-13
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I2-P94.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-09-00507

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().