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

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2003

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Şenoğlu, Demet

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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.

Subject Keywords

Manufacturing industries, Quality variation, Attribute variation, Grubel and Lloyd Index, Unit Value Index

URI

http://etd.lib.metu.edu.tr/upload/1219088/index.pdf
https://hdl.handle.net/11511/13349

Collections

Graduate School of Social Sciences, Thesis

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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.