Vertical Intra-Industry Trade, Technology and Income Distribution: A Panel Data Analysis of EU Trade with Central-East European Countries

Hubert Gabrisch

MPRA Paper from University Library of Munich, Germany

Abstract: This article tests a Heckscher-Ohlin framework versus a neo-Ricardian framework for explaining vertical intra-industry trade. The study applies panel techniques with instrument variables to analyse trade between 'old' EU and 10 Central-East European countries in their transition period. Results show country-pair fixed effects to be of high relevance for explaining vertical intra-industry trade. Technology differences are positively, while differences in factor endowment measured in GDP per capita, are negatively correlated with vertical intra-industry trade, and confirm the relevance of the neo-Ricardian framework. In addition, changing bilateral differences in personal income distribution during the transition of Central-East European countries towards a market economy contribute to changes in vertical intra-industry trade.

Keywords: Vertical intra-industry trade; factor endowment; technology; income distribution; transition; Central-East European countries (search for similar items in EconPapers)
JEL-codes: F14 F15 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (8)

Published in Acta Oeconomica 1 (2009): pp. 1-22

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:64181

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