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Abstract

This paper analyzes determinants of intra-industry trade in food processing for a thirty country sample over the period 1964-1985. Previous studies have tested the hypothesis that imperfect competition is a major determinant of intra-industry trade (UT) in the durable goods manufacturing sectors. This study is distinguished. from the earlier studies of ITT by; the examination of the processed food sector (SIC=20), the use of a panel data set for 22 years and 30 countries available at the four digit SIC level, the use of purchasing power parity measures of GDP, and the use of a weighted tobit model with fixed effects to account for the censored cross-section time-series nature of the data. The results indicate that such trade is a positive function of a county's GDP per capita and equality of GDP per capita between countries. In addition, it is also found that a large proportion of this trade is between countries that share common borders and between countries within the European Community.

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