The Geography of Intra-Industry Trade: Empirics

29 Pages Posted: 18 Jun 2002

See all articles by Patricia Rice

Patricia Rice

University of Southampton - Division of Economics

Martin Stewart

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Anthony J. Venables

University of Oxford; Centre for Economic Policy Research (CEPR)

Date Written: May 2002

Abstract

This Paper uses bilateral trade data for OECD countries at the 3-digit industry level to investigate the geography of intra-industry trade (IIT). IIT diminishes with distance and much of the existing empirical literature suggests that this is an inherent characteristic of such trade, arguing that trade in sectors intensive in IIT is choked off rapidly by distance. We show that the dependence of IIT on geography arises not because of any inherent feature of the effects of distance on such trade, but because of the spatial structure of countries' supply and demand characteristics; close countries do a lot of IIT because they have similar economic structures.

Keywords: Intra-industry trade, trade structure, geography, transport costs

JEL Classification: F10, O10, R10

Suggested Citation

Rice, Patricia and Stewart, Martin and Venables, Anthony J., The Geography of Intra-Industry Trade: Empirics (May 2002). CEPR Discussion Paper No. 3368. Available at SSRN: https://ssrn.com/abstract=316499

Patricia Rice (Contact Author)

University of Southampton - Division of Economics ( email )

Southampton, SO17 1BJ
United Kingdom
44 23 8059 3847 (Phone)
44 23 8059 3858 (Fax)

Martin Stewart

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Anthony J. Venables

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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