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

No 10-2, Working Papers from Korea Institute for International Economic Policy

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 Brülhart 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; Europe; Foreign Direct Investment; EU Enlargement; European Integration (search for similar items in EconPapers)
JEL-codes: F14 F15 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2010-04-15
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:kiepwp:2010_002

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