Measuring vertical and horizontal intra-industry trade for Turkish manufacturing industry over time

Şenoğlu, Demet
In traditional trade theories, foreign trade plays the role of filling the gap of products not produced within the country. However, in the early 1960s increasing exchange of similar products, intra-industry trade, in the world trade have been observed by trade theorists. After the realization of the fact that intra-industry trade has become a very important part of world trade, more comprehensive studies on intra-industry trade have been conducted. At the end of the 1970s, trade theorists started to analyze intra-industry trade between developed countries (horizontal intra-industry trade) and intra-industry trade between developed and developing countries (vertical intra-industry trade) separately, because their characteristics were different. Horizontal intra-industry models were characterized by attribute variation between products while vertical intra-industry models were characterized by quality variation. This study investigates the issue of measurement of horizontal and vertical intra-industry trade for Turkish manufacturing industry. We address the questions of whether the intra-industry trade in Turkish manufacturing sector is more of the horizontal or the vertical type and whether the vertical industries dominates horizontal industries in number at the 3- digit industry level. Empirical analyses shows that the majority of intra-industry trade in Turkish manufacturing sector is of the vertical nature; Turkish manufacturing sector exports lower quality varieties in exchange for higher quality varieties. Also, our empirical analyses indicate that a large percent of 3- digit industries considered as primarily involved in intra-industry trade are vertical industries.


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Citation Formats
D. Şenoğlu, “Measuring vertical and horizontal intra-industry trade for Turkish manufacturing industry over time,” M.S. - Master of Science, Middle East Technical University, 2003.