20 Pages Posted: 16 Mar 2013
Date Written: March 15, 2013
This paper investigates the relationship between intra-industry trade (IIT) and immigration flows using a gravity model for the period 2000-2010 between Portugal and European Union’s Member States (EU-27). The present study uses the methodology of Kandogan (2003) for separating IIT into its components horizontal (HIIT) and vertical intra-industry trade (VIIT). Using a panel data approach, our study find that immigration has a positive influence on Portuguese intra-industry trade. These results indicate that the immigration can reduce transaction costs between home and host country. We also consider in econometric model, the economic dimension which appears to exercise a positive effect on IIT. Our results confirm the hypothesis that there is a negative effect of transportation costs on trade.
Keywords: Gravity Model, Horizontal and Vertical Intra-industry Trade Immigration and Panel Data
JEL Classification: C20, C30, F12, L10
Suggested Citation: Suggested Citation
Leitão, Nuno Carlos, The Impact of Immigration on Portuguese Intra-Industry Trade (March 15, 2013). FEEM Working Paper No. 20.2013. Available at SSRN: https://ssrn.com/abstract=2233949 or http://dx.doi.org/10.2139/ssrn.2233949