Measurement of Intra-industry Trade: a Categorical Aggregation Exercise with Spanish Trade Data

Abstract

One of the features which characterises recent international trade flows is the prevalence of intra-industry trade. This phenomenon may be defined as simultaneous imports and exports of products belonging to the same industry and constitutes an important part of total world trade. The lack of concordance between the predictions of the traditional trade theory and the empirical evidence found has given rise to the appearance of new theories, which try to explain the structure and patterns of international trade by introducing imperfect competitive markets where the existence of scale economies and diversity of consumer preferences constitute essential ingredients.