Country Specific Effects Of Differences In Factor Endowments On Intra-Industry Trade-Illustrated By The Danish Case

• Main Authors: Lars Jensen, Teit Liithje
• Format: Article
• Language: English
• Published: People & Global Business Association (P&GBA) 2008-03-01
• Series: Global Business and Finance Review
• Subjects: country specific effects; endowments; intra-industry trade; technological capital
• Online Access: http://www.gbfrjournal.org/pds/journal/thesis/20150622165330-NM1B9.pdf

This article throws light on the subject whether there are country specific effects of differences in factor endowments on intra-industry trade. We conduct an econometric analysis of the Danish intra-industry trade in both horizontally and vertically differentiated products to examine whether determinants based on trade theory can explain this trade. Basically, we find a relationship between differences in factor endowment between trade partners on one side and the two types of intra-industry trade on the other. As regards horizontally intra-industry trade, the effect of differences in physical capital seems not to be country specific. As regards vertically intra-industry trade, the relationship is not simple and a country specific dependency of the effect of differences in endowment of technological capital is pointed out.