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Vertical and Horizontal Intra-Industry Trade Beetween the U.S. and Nafta Partners

E. M. Ekanayake (), Bala Veeramacheneni () and Carlos Moslares ()
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E. M. Ekanayake: School of Business, Bethune-Cookman university, 640 dr. Mary Mcleod Bethune Blvd. Daytona Beach, FL 32114 - 3099, USA.
Bala Veeramacheneni: Department of history, economics, and Politics, Farmingdale sate college, 2350 Broadhallow road, Farmingdale, NY 11735-1021, USA.
Carlos Moslares: Facultat d'economia IQs, Universitat Ramon llull, Via Augusta 390, 08017 Barcelona, Spain.

Revista de Analisis Economico – Economic Analysis Review, 2009, vol. 24, issue 1, 21-42

Abstract: The main objectives of this paper are to (a) explain the extent of vertical and horizontal intra-industry trade in the United State's foreign trade with the North American Free Trade Area (NAFTA), and (b) identify the industry-specific determinants of vertical and horizontal intra-industry trade. One of the main findings is that the observed increase in intra-industry trade between the United States and NAFTA is almost entirely due to two-way trade in vertical differentiation. Another important finding is that the share of horizontal intra-industry trade has increased significantly during this period, although vertical intra-industry trade continued to be dominant in the U.S.-NAFTA IIT Trade. Among the industry-specific variables, product differentiation, vertical product differentiation, and product quality differences are found to have a positive effect on all three types of IIT shares. Industry concentration and industry size are found to have a negative and statistically significant effect on all three types of IIT share.

Keywords: Vertical and Horizontal Intra-Industry Trade; NAFTA. (search for similar items in EconPapers)
JEL-codes: F14 (search for similar items in EconPapers)
Date: 2009
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