engleski

The integration process as a determinant of the intra-industry trade

Trade structure is usually defined as an inter or intra-industrial type (IIT). The pattern of production and trade that emerges after opening the economies of transition is partly driven by relative factor prices and endowment and partly by economies of scale and scope, but much depends on historical experiences. The first determinacy will lead to the increasing inter-industry trade, so the country which has labor force exports labor-intensive products and imports capital-intensive products because capital is its rare factor. The more dissimilar countries’ endowments are, the greater inter-trade volume will be. This concept of trade is based on Heckser-Ohlin theorem. The second factor will generate IIT, the exchange of similar manufactured goods, with companies specialized in different varieties of similar goods. Economic theory predicts that the volume of IIT depends on two groups of determinants ; the first group is related to country and the second one to industry. The determinants related to country are: the level of economic development, size of market, distance between countries, trade orientation, economic integration and trade barriers. In this paper, we will analyze some of the previously mentioned determinants. In this research, the Grubel-Lloyd index will be used to calculate the intensity of intra-industry trade at the 2-digit Combined Nomenclature levels aimed at determining the relative importance of IIT as opposed to the inter-industry trade in the trade exchange between Croatia and the EU as well as between the EU and some other transition countries. IIT will be estimated for the whole trade and across industries in the case of Croatia. A time series approach will be used to estimate any trend in the ratio of intra-industry trade to total trade in relation to the EU. These analyses should consider how trade has changed in the period of trade liberalization, including the integration process. On the basis of the collected statistical data, the IIT and inter-industry indexes will be calculated. Besides, we will analyze if there is a vertical or horizontal intra-industry trade. According to the economic theory, the removal of trade barriers through bilateral and multilateral negotiations has positive impacts on IIT but the results do not support the hypotheses, especially in the case of Croatia, where IIT decreases as the integration process goes on.

intra-industry trade; GL index; determinants; integration; Croatia

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