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• Deep vs. Shallow Integration. The Case of NAFTA and Mercosur

  68-82

  Diana Balkay

  Laszlo Erdey

  Views:

  169

  Integration processes began in the 1960s and have become increasingly intense, bringing with them a growing share of intra-industry trade flows in international trade. According to the Smooth Adjustment Hypothesis (SAH), trade between similar industries or products results in lower adjustment costs in the factor markets. Due to the liberalizing effect of trade integrations trade flows intensify, causing an increase in intra-industry trade flows and consequently a decrease in adjustment costs at the same time. The alteration of trade patterns can be caused by changes both in quantity and in quality. Analyzing these effects separately allows us to better understand the trade policy practices of the chosen countries and to provide the decision makers with information.
  In this paper we analyze NAFTA and Mercosur, two integrations which differ both in factor endowments and in depth of integration (deep vs. shallow). We used SITC Rev. 1 AG3 (industrial level) and HS92 AG6 (product level) bilateral trade data from the UN COMTRADE database to analyze the evolution of intra-industry trade flows.

  Journal of Economic Literature (JEL) classifications: F13, F14, F15

• The influence of intra-industry trade on adjustment costs and the synchronisation of boom cycles

  61-82

  Laszlo Erdey

  Views:

  122

  For researchers studying intra-industry trade and the methodology involved in measuring the phenomenon one of the most important driving forces was the assumption that the creation of economic integration would lead to lower adjustment costs than were characteristic of the traditional commercial model. Another result was that - according to empirical data - intra-industry trade would receive a strong incentive from liberalisation, and that the accompanying adjustment costs would be lower than in cases there there was specialisation bewteen branches. In so far as this is demonstrable, proponents of attempts to achieve general integration offered a convenient weapon to their opponenets, who consistently argued back that it was precisely the difficult application of this process and its drawn-out and 'painful' nature that caused high costs. The first part of the article is devoted to a discussion of this debate, while the second part focuses on the role intra-industry trade plays in harmonisation with business cycles. The article shows that an examination of the intensity and dynamism of intra-industry trade allows a much more sophisticated analysis of a country's position in the world economy than is usually possible.

• Intraindustrial trade in the light of theoretical explanations and empirical investigations

  78-104

  Laszlo Erdey

  Views:

  192

  The Heckscher-Ohlin (HO) model regarde as a modern theory of trade, dominant for more than a quarter of a century had to face more and more challenges in the second half of the 20th century. It seemed that the 2*2*2 (product-factor-country) model, which assumed perfect competition, constant return to scale and homgeneous products and whose elegance was rooted in its simplicity, could not offer appropriate answers for the explanation of empirical facts in two significant areas. The conclusion of the model, namely that countries will have a comparatvie advantage in the productions of goods for which they use factors of production relatively abundant in the country, was first questioned by the Leontief paradox and later by the empirical facts of intraindustrial trade. The study focuses on this latter phenomenon. In the first part it presents and classifies the major theoretical models of the phenomenon, and in the second it discusses, on the basis of empirical surveys in this field, the most important factors influencing intraindustrial trade.

• Integration of the CEE agri-food sector into the EU: What does trade theory and empirical evidence tell us?

  62-77

  Imre Ferto

  Views:

  149

  The article provides an overview on the main results of empirical research into the Integration of the CEE agri-food sector into the EU. Contrary to early expectations, countries in the region have not become major agri-food exporters. We can observe great diversity in trade specialisations, the patterns of intra-industry trade and price and quality competitiveness among countries and major product groups. These outcomes derive mainly from the differences in relative factor endowments and the different initial conditions of the countries concerned. The recent theoretical and empirical developments in international
  trade may help us to better understand the agri-food trade integration of new member states.

  JEL classification: Q12