Endowment Differences and the Composition of Intra-Industry Trade

Manuel Cabral, Rod Falvey, Chris Milner*

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

4 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)401-418
Number of pages18
JournalReview of International Economics
Volume21
Issue number3
DOIs
Publication statusPublished - Aug 2013

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