engleski

The pattern of horizontal and vertical intra-industry trade: the case of Croatia

During the 60s, empirical date showed that countries import and export similar products, which suggested that trade patterns, would not be in accordance with the traditional trade theory of factor endowments and new theoretical approaches set out. Economic theory teaches us that different relative factor prices and endowment will lead to the increasing inter-industry trade while economies of scale and scope will generate intra-industry trade, the exchange of similar manufactured goods, with companies specialized in different varieties of similar goods. Economic theory predicts that the volume of intra-industry trade is a function of the similarity and the level of gross domestic product of countries, and of a distance. There are two types of intra-industry trade, horizontal (the exchange of similar product) and vertical (the exchange of inputs for more processed outputs or exchange quality different products). Scale economics, similarity of income levels, and number of varieties produced play important roles in IIT, especially in horizontal IIT, whereas factors such as comparative advantage, dissimilarity in income levels lead to development of the trade pattern based on Hackscher-Ohlin Trade Theory and increasing inter-industry trade and vertical IIT to a lesser degree. Economic studies show relatively high level of IIT with EU for all CEECs countries and vertical IIT accounts for 80 to 90 percents of total IIT. In this paper will be analyze the trade pattern of Croatia and intra-industry trade between Croatia and the EU. The aim of this paper is to estimate the intra-industry pattern between Croatia and EU and also made the evaluation of the whole Croatian intra-industry trade.

integration process; intra-industry trade; horizontal and vertical IIT; Croatia

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