Endowment Differences and the Composition of Intra‐Industry Trade

18 Pages Posted: 16 Jul 2013

See all articles by Manuel Heredia Cabral

Manuel Heredia Cabral

University of Minho

Rod Falvey

Bond University - Department of Economics

Chris Milner

University of Nottingham - School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 2013

Abstract

The empirical relationship between differences in endowments and different types of trade is investigated in this paper. Although net trade (NT) and vertical intra‐industry trade (IIT) are both broadly viewed as reflecting endowment differences, we suggest that there will be systematic differences in the way their shares of trade adjust as endowment differences become larger. Empirical evidence for European Union trade with its 52 major trading partners confirms this. The share of horizontal IIT (net trade) decreases (increases) for all increases in absolute endowment differences, but the share of vertical IIT can both increase and decrease with increases in endowment differences.

Suggested Citation

Cabral, Manuel Heredia and Falvey, Rod and Milner, Chris, Endowment Differences and the Composition of Intra‐Industry Trade (August 2013). Review of International Economics, Vol. 21, Issue 3, pp. 401-418, 2013. Available at SSRN: https://ssrn.com/abstract=2294286 or http://dx.doi.org/10.1111/roie.12044

Manuel Heredia Cabral

University of Minho ( email )

Braga, 4700
Portugal

Rod Falvey

Bond University - Department of Economics ( email )

Bond University - Department of Economics
Gold Coast, Queensland 4229
Australia

Chris Milner

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

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