Country-specific determinants of intra-industry trade:evidence from Portugal

• Author(s): Leitão, Nuno Carlos ; Faustino, Horácio C.
• Date: 2012
• Persistent ID: http://hdl.handle.net/10400.15/733
• Origin: Repositório Científico do Instituto Politécnico de Santarém
• Subject(s): Intra industry trade; Linder hypothesis; Panel data; Portugal
• Document Type: Article
• Language: English

Description

This paper uses a static and dynamic panel data approach to test the country specific deter minants of Portuguese intra industry trade (IIT). We include income variables together with sup ply side variables in order to test the demand similarity and factor endowments difference hypothe ses. The results suggest that the Linder hypothesis is confirmed and that differences in income lev els have positive effect on vertical IIT and a negative effect on IIT and horizontal IIT. However,our findings only partially confirm Helpman's and Krugman's theoretical predictions of the nega tive relationship between differences in relative factor endowments and IIT.