Measurement, Technological Capability, and Intra-Industry Trade: Evidence from the EU

Ali Choudhary, Paul Temple and Lei Zhao
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Lei Zhao: University of Surrey

No 1406, School of Economics Discussion Papers from School of Economics, University of Surrey

Abstract: In this paper we develop models of intra-industry trade in which the technological infrastructure associated with measurement activity plays a role in determining the ability of firms to differentiate their products, making them more marketable, and hence promoting intra-industry trade. We observe that public support for the measurement infrastructure is an important element of public support for industry, while publicly available technical standards provide a significant means by which firms make use of this infrastructure. As an empirical test for the importance of the measurement infrastructure, we consider bi-lateral intra-industry trade flows between economies in the EU and find that both a measure of the cross industry importance of the measurement infrastructure – as proxied by standards - as well as the degree of investment in the ability to measure – as proxied by the use of instruments – are important correlates of intraindustry trade. The econometric analysis suggests that differences in national measurement infrastructures continue to play an important role in determining EU trade flows.

Keywords: Intra-industry trade; technology; product differentiation; manufacturing (search for similar items in EconPapers)
JEL-codes: F12 F14 F15 L1 L60 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2006-08
New Economics Papers: this item is included in nep-eec and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:sur:surrec:1406

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