Intra-industry trade by types: What can we learn from Portuguese data?

  • Nuno Crespo
  • Maria Paula FontouraEmail author


We provide evidence on intra-industry trade (IIT) in the Portuguese case from 1994 onwards by disentangling vertical from horizontal IIT with two different indexes—the Grubel-Lloyd and the so-called CEPII index- and analyse the determinants of both IIT types. Distinct explanatory factors are identified for each IIT type and we confirm the comparative advantage explanation in the vertical case. The regression results are robust to different estimation methods and to alternative IIT indexes. Nonetheless, sensitivity of the IIT levels to the arbitrary criterion of the CEPII measurement points out to the Grubel-Lloyd index as a preferable method. JEL no. F12, F14


Intra-industry trade product differentiation unit values comparative advantage Portugal 


  1. Abd-El-Rahman, K. (1986). Réexamen de la Définition et de la Mesure des Échanges Croisés de Produits Similaires entre les Nations.Révue Économique 37 (1): 89–115.CrossRefGoogle Scholar
  2. Balassa, B., and L. Bauwens (1988).Changing Trade Patterns in Manufactured Goods: An Econometric Investigation. Amsterdam: North-Holland.Google Scholar
  3. Bassani, A., S. Scarpetta, and P. Hemmings (2001). Economic Growth: The Role of Policies and Institutions. Panel Data Evidence from OECD Countries. Working Paper 283. OECD, Paris.Google Scholar
  4. Benhabib, J., and M. Spiegel (1994). The Role of Human Capital in Economic Development: Evidence from Aggregate Cross-Country Data.Journal of Monetary Economics 34 (2): 143–173.CrossRefGoogle Scholar
  5. Blanes, J., and C. Martín (2000). The Nature and Causes of Intra-Industry Trade: Back to the Comparative Advantage Explanation? The Case of Spain.Review of World Economics/Weltwirtschaftliches Archiv 136 (3): 423–441.Google Scholar
  6. Deininger, K., and L. Squire (1996). Measuring Income Inequality: A New Data-base.World Bank Review 10 (3): 565–591.Google Scholar
  7. Dixit, A., and V. Norman (1980).Theory of International Trade: A Dual General Equilibrium Approach. Cambridge: University Press.Google Scholar
  8. Durkin, J., and M. Krygier (2000). Differences in GDP per Capita and the Share of Intraindustry Trade: The Role of Vertically Differentiated Trade.Review of International Economics 8 (4): 760–774.CrossRefGoogle Scholar
  9. Eaton, J., and H. Kierzkowski (1984). Oligopolistic Competition, Product Variety, and International Trade. In H. Kierzkowski (ed.),Monopolistic Competition and International Trade. New York: Oxford University Press.Google Scholar
  10. Ethier, W. (1982). National and International Returns to Scale in the Modern Theory of International Trade.American Economic Review 72 (3): 389–405.Google Scholar
  11. European Commission (1996). Economic Evaluation of the Internal Market.European Economy, Reports and Studies 4/1996.Google Scholar
  12. Falvey, R. (1981). Commercial Policy and Intra-Industry Trade.Journal of International Economics 11 (4): 495–511.CrossRefGoogle Scholar
  13. Falvey, R., and H. Kierzkowski (1987). Product Quality, Intra-Industry Trade and (Im)perfect Competition. In H. Kierzkowski (ed.),Protection and Competition in International Trade. Oxford: Basil-Blackwell.Google Scholar
  14. Fontagné, L., and M. Freudenberg (1997). IIT: Methodological Issues Reconsidered. CEPII Working Paper 97/02. Centre d'Études Prospectives et d'Informations Internationales, Paris.Google Scholar
  15. Fontagné, L., M. Freudenberg, and N. Péridy (1998). Intra-Industry Trade and the Single Market: Quality Matters. CEPR Discussion Paper 1959. Centre for Economic Policy Research, London.Google Scholar
  16. Greenawa, D., and C. Milner (1986). The Economics of Intra-Industry Trade. Oxford: Basil-Blackwell.Google Scholar
  17. Greenaway, D., R. Hine, and C. Milner (1994). Country-Specific Factors and the Pattern of Horizontal and Vertical Intra-Industry Trade in the UK.Review of World Economics/Weltwirtschaftliches Archiv 130 (1): 77–100.Google Scholar
  18. Greenaway, D., R. Hine, and C. Milner (1995). Vertical and Horizontal Intra-Industry Trade: A Cross-Industry Analysis for the United Kingdom.Economic Journal 105 (November): 1505–1519.CrossRefGoogle Scholar
  19. Gullstrand, J. (2002). Does the Measurement of Intra-Industry Trade Matter?Review of World Economics/Weltwirtschaftliches Archiv 138 (2): 317–339.Google Scholar
  20. Havrylyshyn, O., and E. Civan (1983). Intra-Industry Trade and the Stage of Development: A Regression Analysis of Industrial and Developing Countries. In P. Tharakan (ed.),Intra-Industry Trade: Empirical and Methodological Aspects. Amsterdam: North-Holland.Google Scholar
  21. Helpman, E. (1981). International Trade in the Presence of Product Differentiation, Economies of Scale and Monopolistic Competition.Journal of International Economics 11 (3): 305–340.CrossRefGoogle Scholar
  22. Helpman, E., and Krugman, P. (1985).Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition and the International Economy. Cambridge, Mass.: MIT Press.Google Scholar
  23. Krugman, P. (1979). Increasing Returns, Monopolistic Competition, and Inter-National Trade.Journal of International Economics 9 (4): 469–479.CrossRefGoogle Scholar
  24. Krugman, P. (1980). Scale Economies, Product Differentiation and the Pattern of Trade.American Economic Review 70 (5): 950–959.Google Scholar
  25. Lancaster, K. (1980). Intra-Industry Trade under Perfect Monopolistic Competition.Journal of International Economics 10 (2): 151–175.CrossRefGoogle Scholar
  26. Lee, H., and Y. Lee (1993). Intra-Industry Trade in Manufactures: The Case of Korea.Review of World Economics/Weltwirtschaftliches Archiv 129 (1): 159–171.Google Scholar
  27. Loertscher, R., and F. Wolter (1980). Determinants of Intra-Industry Trade among Countries and across Industries.Review of World Economics/Weltwirtschaftliches Archiv 116 (2): 280–293.Google Scholar
  28. Martín-Montaner, J., and V. Ríos (2002). Vertical Specialization and Intra-Industry Trade: The Role of Factor Endowments.Review of World Economics/Weltwirtschaftliches Archiv 138 (2): 340–365.Google Scholar
  29. Mora, C. (2002). The Role of Comparative Advantage in Trade within Industries: A Panel Data Approach for the European Union.Review of World Economics/Weltwirtschaftliches Archiv 138 (2): 291–316.Google Scholar
  30. Nielsen, J., and T. Lüthje (2002). Tests of the Empirical Classification of Horizontal and Vertical Intra-Industry Trade.Review of World Economics/Weltwirtschaftliches Archiv 138 (4): 587–604.Google Scholar
  31. Porto, M., and F. Costa (1999). Portugal. In M. Brülhart and R. Hine (eds.),Intra-Industry Trade and Adjustment—The European Experience. Basingstoke, Hampshire: Macmillan Press.Google Scholar
  32. Shaked, A., and J. Sutton (1984). Natural Oligopolies and International Trade. In H. Kierzkowski (ed.),Monopolistic Competition and International Trade. New York: Oxford University Press.Google Scholar
  33. Stiglitz, J. (1987). The Causes and Consequences of the Dependence of Quality of Price.Journal of Economic Literature 25 (1): 1–48.Google Scholar
  34. Tharakan, P., and B. Kerstens (1995). Does North-South Horizontal Intra-Industry Trade Really Exist? An Analysis of the Toy Industry.Review of World Economics/Weltwirtschaftliches Archiv 131 (1): 86–105.CrossRefGoogle Scholar
  35. Veeramani, C. (2002). Intra-Industry Trade of India: Trends Country-Specific Factors.Review of World Economics/Weltwirtschaftliches Archiv 138 (3): 509–533.Google Scholar

Copyright information

© Kiel Institute for World Economics 2004

Authors and Affiliations

  1. 1.ISEGTechnical University of LisbonLisboa

Personalised recommendations