Title

Endowment differences and the composition of intra-industry trade

Date of this Version

1-1-2013

Document Type

Journal Article

Publication Details

Citation only

Cabral, M., Falvey, R., & Milner, C. (2013). Endowment differences and the composition of intra-industry trade. Review of International Economics, 21(3), 401-418.

Access the journal

2013 HERDC submission. FoR code: 140210

© Copyright, John Wiley & Sons Ltd, 2013

ISSN

0965-7576

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.

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This document has been peer reviewed.