Open Economies Review

, Volume 7, Issue 2, pp 161–175 | Cite as

How important is intra-industry trade in trade growth?

  • Jayant Menon
  • Peter B. Dixon
Article

Abstract

Empirical work on intra-industry trade (IIT) is almost 30 years old. Initial research sought to identify if IIT was a significant share of total trade (TT). The Grubel-Lloyd (GL) index was widely used for this purpose. Interest has since shifted to the changing importance of IITover time. Using movements in the GL index to infer the importance of IIT over time is not only vague, but can be misleading. In this article, we measure the contributions of growth in net trade (NT) and IIT to the growth in TT. To understand changes in IIT over time, we also derive the contributions of imports and exports to the growth in TT, NT, and IIT. All our formulas are illustrated with data for 205 Australian manufacturing industries.

Key words

intra-industry trade decomposing trade growth adjustment costs 

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Copyright information

© Kluwer Academic Publishers 1996

Authors and Affiliations

  • Jayant Menon
    • 1
  • Peter B. Dixon
    • 1
  1. 1.Centre of Policy Studies and the IMPACT ProjectMonash UniversityClaytonAustralia

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