We present an analysis of the intra-industry nature of agri-food trade between Hungary and the European Union, following the Association Agreement signed in 1991. A slight growth in intra-industry trade is indicated by the Grubel-Lloyd index. However, it is not uniform by product group or EU member state or over time, reflecting different patterns of bilateral integration and an economic restructuring process that is far from complete. Marginal intra-industry trade appears to be low, but assumes greater significance when the index is broadened to include vertical as well as horizontal trade. Thus, growth in agri-food trade between Hungary and the EU over the period 1992-98 is shown to be dominated by vertical intra-industry trade and inter-industry trade. Adjustment costs due to partial trade liberalisation are likely therefore to have been relatively high.


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