INTRA-INDUSTRY TRADE PROGRESS AND CHALLENGES.pptVIP

INTRA-INDUSTRY TRADE:PROGRESS AND CHALLENGES Chris Milner University of Nottingham Presentation to INTECO Workshop at the University of Valencia, Dec 1st-2nd, 2005 Introduction Intra-industry trade is a topic I return to with gaps Given the increasing heterogeneity of international interactions and emergence of new theoretical and empirical approaches, thought some stock-taking would be useful what progress has been made to resolve ‘old’ issues? has IIT analysis a role to play in new context? Organisation of the Presentation Progress On measurement On modelling theoretical empirical Overall Evaluation Challenges Measurement of IIT Starting with measurement contrary to usual preference to start with theory, but how the literature started also! Issues of aggregation effects and heterogeneity still critical ‘statistical artefact’ concerns may no longer be expressed, but empirical challenge of categorical aggregation remains, perhaps even more challenging now have a strand of literature that represents industries as heterogeneous (in terms of technology/productivity of firms) Measurement Issues Industry definition official classification v. selective regrouping Aggregation bias sensitivity analysis and use of amended indices Adjustment for trade imbalance Bilateral v. multilaterally Degree of matching v. extent of two-way trade Grubel-Lloyd v. Fontagne-Freudenberg depends on purpose at hand Grubel-Lloyd (GL) Index GL index measures share of IIT in gross trade (GT) ie IIT/GT where: IIT = 2 min (Xj, Mj) GT = (Xj + Mj) = IITj + NTj (NTj = net trade) can be applied for any level of aggregation offers a comprehensive decomposition of net and matched trade does not measure the amount of IIT does not distinguish between H-O and non-H-O industries Other Developments on Measurement Marginal or dynamic measures of IIT if interested in adjustment effects of changes in IIT, then better to use something other than traditional GL indices (see Greenaway et al, 1994) Extend