Investigating the composition of product-level specialization
Purba Mukerji () and
Arvind Panagariya ()
Additional contact information
Purba Mukerji: Connecticut College
Indian Economic Review, 2019, vol. 54, issue 1, 3-18
Abstract Intra-industry trade has practical implications for the extent of direct competition countries face. Our paper contributes to the literature by proposing a new index of intra-industry trade that incorporates information from product-level trade data. The new index categorizes trade as intra-industry only if exports and imports are close substitutes as measured by the average proximity of their prices. This criteria of qualifying as intra-industry trade is based on product characteristics unlike the traditional Grubel–Lloyd (GL) index which is based on the level of data aggregation. GL index rises automatically with data aggregation creating serious questions regarding its dependability as a reasonable measure. By capturing substitutability of exports and imports, the new measure remains true to the theoretical definition of intra-industry trade irrespective of the level of data aggregation. The new index estimates intra-industry trade was, on average, only 14% as compared to the 21% estimated by the GL index for the US between 1989 and 2001. Furthermore, the new index yields estimates that have no predictable relation to data aggregation and remain quite stable as the level of aggregation changes.
Keywords: Intra-industry trade; Grubel–Lloyd index; Trade competition and negotiations; F14 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s41775-019-00047-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:inecre:v:54:y:2019:i:1:d:10.1007_s41775-019-00047-4
Ordering information: This journal article can be ordered from
Access Statistics for this article
Indian Economic Review is currently edited by Uday Bhanu Sinha, Abhijit Banerji, Shreekant Gupta and J.V. Meenakshi
More articles in Indian Economic Review from Springer
Bibliographic data for series maintained by Sonal Shukla ().