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Evolving Pattern of Intra-industry Trade Specialization of the New Member States of the EU: The Case of the Automotive Industry

  • Elżbieta Kawecka-Wyrzykowska
Chapter

Abstract

The paper investigates the development of intra-industry trade of the new Member States with major partners between 2000 and 2007. Intra-industry trade is separated into horizontal and vertical components on the basis of differences in unit values. We have found that although inter-industry trade still accounts for almost 50% of the trade of the countries that joined the EU in 2004, its share has been declining to the benefit of intra-industry trade (except for Malta). Intra-industry trade accelerated in the post-accession period and in 2007 Slovenia and the Czech Republic recorded the highest shares. Intra-industry trade of the new Member States has been dominated by the vertical component, usually low-quality goods. However, in almost all new Member States, the share of high-quality vertical intra-industry trade, as well as the horizontal component increased. Thus, the pattern of trade specialization in the new Member States has improved. Growing shares of intra-industry trade, particularly the horizontal component, reflect increasing similarities between new and old Member States and a favourable convergence process between the two groups of countries. In the automotive sector, intra-industry trade is generally larger than in total trade, meaning deeper specialization. This phenomenon can be largely attributed to the high volume of foreign direct investment in the sector.

Keywords

Member State Foreign Direct Investment Total Trade Trade Specialization Automotive Sector 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Notes

Acknowledgments

The author wishes to thank Prof. Elżbieta Czarny for helpful comments. Data has been compiled by Łukasz Ambroziak and Maciej Sewerski, who produced the tables and figures.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2010

Authors and Affiliations

  1. 1.Jean Monnet Chair of European IntegrationWarsaw School of EconomicsWarsawPoland

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