Country size, income level and intra-industry trade

Authors: Taegi, Kim; Oh, Keun-Yeob

Source: Applied Economics, Volume 33, Number 3, 1 February 2001 , pp. 401-406(6)

Publisher: Routledge, part of the Taylor & Francis Group

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Abstract:

This study investigates three testable hypotheses of intra-industry trade. It begins by developing a theoretical, two country model. The model explicitly includes two goods: differentiated products and homogeneous goods. Then three empirical hypotheses are derived as follows. The share of intra-industry trade will be large: (a) if the two economies are of similar size, (b) if the capital-labour endowment ratio of both countries is similar, and (c) if the total size of the two economies is large. From the cross-sectional analysis using 1970-1994 data, results are obtained that support the model. Furthermore, the results are confirmed using panel analysis on the pooled data.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840122211

Publication date: February 1, 2001

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