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

  68-82

  Diana Balkay

  Laszlo Erdey

  Views:

  154

  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

• A Review of Hungarian Research Antecedents and the Assessment of Fair Trade in Hungary

  54-68

  Eszter Toth

  Views:

  474

  Fair trade is a civil initiative aiming to provide fair conditions to the poor producers of the Third World and enable them to follow a sustainable model of development. This realigned commercial partnership is to modify the rules of traditional international trade between the producers of the southern nations and purchasers of the northern hemisphere and replace them with a novel alternative. Fair trade has unified techniques of labeling and a well-established institutional system in order to change the rules of the game that have controlled the dominant economic model. The main tool of the movement is the engagement of conscious and socially responsible consumers towards the topic. This review summarizes the Hungarian reports and studies done about the issue so far and introduces the present circumstances in Hungary.

  Journal of Economic Literature (JEL) code: F13, F18, J81, P45

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

  61-82

  Laszlo Erdey

  Views:

  111

  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.

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

  62-77

  Imre Ferto

  Views:

  135

  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

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

  78-104

  Laszlo Erdey

  Views:

  171

  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.

• A review of the border effect literature – is domestic trade really biased?

  81-102

  Ádám Márkus

  Views:

  147

  The aim of this article is to give a comprehensive review of the border effect literature. The author demonstrates through a number of empirical results that state borders still obstruct commodity trade flows between countries significantly, even in the twenty first century’s globalized world market. Countries’ trade patterns show a massive bias toward domestic markets, which can be only partially justified by formal factors such as income differences, distances, tariffs, cultural or linguistic dissimilarities and different currencies. Controlling for all these factors does not abolish the hindering role of borders, which suggests that the preference for domestic partners is excessive. The paper analyses major gravity model specifications and estimation methods in order to shed light on solving the border puzzle.
  

  Journal of Economic Literature (JEL) kódok: F14, F15

• Revealed comparative advantage in Hungarian agriculture: a chaotic or coherent pattern?

  59-82

  Imre Ferto

  Views:

  114

  We describe the evolving pattern of Hungarian agri-food trade using recently developed empirical procedures based around the classic Balassa Index at various aggregation level and different bechmark between 1992 and 2002. Our results shows a significant geographical differences and across sub-sectors of 1, 2, and 3 digit SITC classification. The extent of trade specialisation exhibits a declining trend for all benchmarks; Hungary has lost comparative advantage for a number of product groups over time. The indices of specialisation have also tended to converge. For particular product groups, the indices display greater variation. They are stable for product groups with comparative disadvantage, but product groups with weak to strong comparative advantage show significant variation.

  Journal of Economic Literature (JEL) classification: Q12

• Strategic market entry barriers in Hungary

  91-107

  Adam Torok

  Zsuzsa Deli-Gray

  Views:

  203

  This study is a continuation of a former project of the same research team. The focus of the research is market entry in Hungary for foreign firms, along with strategic entry barriers to both domestic and foreign importers to Hungary. A comparison of our findings from 2003 and 2008 gives some insights into the integration of the Hungarian domestic market into the Single European Market. Practical advice is offered to Hungarian market players on the scope of strategic entry barriers in Hungary as well as the ways entrepreneurs assess them.

  JEL classification: F13, F14, F15

• The prospects of uniformization of the internal market of electricity in the European Union

  3-22

  Eva Sztanko

  Views:

  223

  The European internal market of electricity is not yet uniform, although it has been moving toward this direction for the last two decades. The energy market position of the consumers has been strengthening, the liquidity and the cross-border trade of the European electricity markets has been increasing. The stronger competition limited the wholesale prices. Despite the backsliding or stagnating household and industrial consumption, however, the retail prices and the costs have been increasing. The EU has to carry on reforming the electricity market in order to satisfy the need for more flexible energy-systems, to increase the competition, to make the consumers react to price changes in a more flexible way, to create more cost-effective governmental/market measures to handle price volatilities, to finance investments, and to minimise cost increases. The most recent comprehensive recommendations of the European Committee intend to create a new electricity market model, however, it yet remains to see the reception of these on behalf of the member countries.

  Journal of Economic Literature (JEL) code: Q48

• Openness and growth

  126-134

  Peter Foldvari

  Views:

  117

  The classical theory of commerce encourages the liberalization of international trade on the grounds that this contributes considerably to the growth of welfare. This study sets out to explore this hypothesis empirically by analysing the relationship between external market openness and per capita GDP examined in twenty-two OECD countries between 1950 and 2000. The results bear out to support the existence of a positive correlation. The novelty of the study is that the author pays special attention to the temporal aspects of the interaction between openness and per capita GDP which can be characterised in terms of a nonstationary and nonlinear trend, as expected.

• The dynamic of Hungary's Agro-Food Trade in the Global Economy

  26-35

  Imre Ferto

  Views:

  107

  We analyse the evolving pattern of Hungary's agro-food trade using recently developed emprirical procedures based around the classic Balassa index and its symmetric transformation. The extent of trade specialisation exhibits a declining trend; Hungary has lost comparative advantage for a number of product groups over time. The indices of specialisation have also tended to converge. For particular product groups, the indices display a less persistent pattern. They are stable for product groups with comparative disadvantage, but product groups with weak or strong comparative advantage show significant variation. The results reinforce the finding of a general decrease in specialisation but do not support the idea of self-reinforcing mechanisms, emphasised strongly in much of the endogenous groeth and trade literature.