Frontiers of Research in Intra-Industry Trade

Frontiers of Research in Intra-Industry Trade

Frontiers of Research in Intra-Industry Trade

Frontiers of Research in Intra-Industry Trade


P.J. Lloyd and Hyun-Hoon Lee have assembled an international cast of contributors to offer a selection of models examining the nature of intra-industry trade in several new areas of trade theory, in addition to empirical studies and analysis of much new data in trade patterns. This volume provides an authoritative new treatment of the theory, measurement and testing of the subject of intra-industry trade.


P. J. Lloyd and Hyun-Hoon Lee

When intra-industry trade was first observed in the 1960s by Verdoorn (1960), Balassa ( 1963, 1966) and Grubel (1967), it was a new and exciting way of examining patterns of goods trade. These authors made the revolutionary observation that there was specialization within industries and two-way international trade in the multiple outputs of industries. Grubel and Lloyd (1975) developed the most widely used index for the measurement of intra-industry trade. Using this measure, they found that the unweighted mean share of intra-industry trade in the total goods trade of ten major oecd countries in 1967 was 50 per cent. Grubel and Lloyd and others attempted to develop a theoretical basis for the existence of intra-industry trade in both homogeneous and differentiated products. However, the underlying concept of an industry was rarely examined, and theorizing was, in the main, partial equilibrium analysis.

Starting with the work of Krugman (1979) and Lancaster (1980), a number of formal general equilibrium models which yielded intra-industry trade were developed. These models used different specifications of industries and international trade. Some yielded what became known as horizontal intra-industry trade in differentiated final products or in homogeneous products, some vertical intra-industry trade in different qualities of products, and some other forms of intra-industry trade such as fragmentation. New models continue to emerge.

New aspects of intra-industry trade have also been observed. the concept of intra-industry trade has expanded to incorporate marginal intra-industry trade, intra-firm trade, intra-industry trade in New Geography models, and intra-industry trade in services.

The world is becoming one global economy. in the second half of the twentieth century, the world economy witnessed many dramatic

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