Table Of ContentINTRA-INDUSTRY TRADE AND ADJUSTMENT
Intra-Industry Trade
and Adjustment
The European Experience
Edited by
Marius Briilhart
University of Manchester
and
Robert C. Hine
University of Nottingham
~
in association with
~
PALGRAVE MACMILLAN
First published in Great Britain 1999 by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS and London
Companies and representatives throughout the world
A catalogue record for this book is available from the British Library.
ISBN 978-1-349-27175-7 ISBN 978-1-349-27173-3 (eBook)
DOI 10.1007/978-1-349-27173-3
First published in the United States of America 1999 by
ST. MARTIN'S PRESS, INC.,
Scholarly and Reference Division,
175 Fifth Avenue, New York, N.Y. 10010
ISBN 978-0-312-21568-2
Library of Congress Cataloging-in-Publication Data
Intra-industry trade and adjustment : the European experience I edited
by Marius Briilhart and Robert C. Hine.
p. em.
Includes bibliographical references and index.
ISBN 978-0-312-21568-2 (cloth)
1. European Union countries-Commerce. 2. Industries-European
Union countries. I. Briilhart, Marius. II. Hine, R. C.
HF3496.5.158 1998
382'.094-dc21 98-16157
CIP
©Centre of Research in European Development and International Trade (CREDIT) 1999
Softcover reprint of the hardcover 1st edition 1999 978-0-333-62304-6
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Any person who does any unauthorised act in relation to this publication may be liable to
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This book is printed on paper suitable for recycling and made from fully managed and
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10 9 8 7 6 5 4 3 2 1
08 07 06 05 04 03 02 01 00 99
This book is dedicated to the memory of
Johan Torstensson
1964-1998
in appreciation both of his friendship and of his distinguished
contribution to scholarship in the economics of international trade.
Contents
List of Contributors IX
Preface X
David Greenaway
Overview
Marius Brillhart and Robert C. Hine
PART I: THEORY AND MEASUREMENT
2 Intra-Industry Trade: What Does the Theory
Predict and How Robust Are the Empirical Estimates? 13
Johan Torstensson
3 Marginal Intra-Industry Trade and Trade-Induced
Adjustment: A Survey 36
Marius Brillhart
4 Vertical and Horizontal Intra-Industry Trade:
An Analysis of Country- and Industry-Specific
Determinants 70
Robert C. Hine, David Greenaway and Chris Milner
5 A Survey of Intra-Industry Trade in
the European Union 98
Marius Brillhart and Robert J.R. Elliott
PART II: COUNTRY STUDIES
6 Belgium 121
P.K.M. Tharakan and German Calfat
7 France 135
Mohamed Harfi and Christian Montet
8 Germany 151
Heinz-Dieter Smeets
VII
Vlll Contents
9 Greece 168
Alexander H. Sarris, Pyrros Papadimitriou and
Athanassios Mavrogiannis
10 Ireland 188
Marius Brillhart, Dermot McAleese and
Mary O'Donnell
11 Italy 213
Gianpaolo Rossini and Michele Burattoni
12 The Netherlands 225
Jacob Kol and Bart Kuijpers
13 Portugal 239
Manuel Porto and Fernanda Costa
Index 252
List of Contributors
Marius Brftlhart University of Manchester
Michele Burattoni Universita di Bologna
German Calfat University of Antwerp, UFSIA
Fernanda Costa Universidade de Coimbra
Robert J.R. Elliott Manchester Metropolitan University
David Greenaway University of Nottingham
Mohamed Harfi Universite de Montpellier I
Robert C. Hine University of Nottingham
Jacob Kol Erasmus University Rotterdam
Bart Kuijpers Erasmus University Rotterdam
Athanassios Mavrogiannis University of Athens
Christian Montet Universite de Montpellier I
Dermot McAleese Trinity College Dublin
Chris Milner University of Nottingham
Manuel Porto Universidade de Coimbra
Mary O'Donnell University of Limerick
Pyrros Papadimitriou University of Athens
Gianpaolo Rossini Universita di Bologna
Alexander H. Sarris University of Athens
Heinz-Dieter Smeets Heinrich-Heine Universitiit Dusseldorf
P.K.M. Tharakan University of Antwerp, UFSIA
Johan Torstensson Lund University
ix
Preface
The chapters in this volume are the fruits of a major multinational
programme coordinated from the University of Nottingham. The
programme was funded under the European Union's Stimulation Plan
for Economic Science (SPES). SPES was created to encourage col
laboration between researchers across the EU. SPES support on this
particular initiative brought together researchers from eight of the
Member States in a comparative analysis of intra-industry trade in
Europe. As this volume and a related series of journal articles testify,
that collaboration proved to be very successful. Moreover, it has also
proved to be durable in that a number of sub-sets of these researchers
have moved on to collaborate on other projects.
I am very grateful for the support provided by the EU and for the
efforts which colleagues put into what turned out to be a stimulating
and informative programme. Finally I would like to record my thanks
to Marius Briilhart and Bob Hine for their expert editorial work on
this important volume.
David Greenaway
X
1. Overview
Marius Briilhart and Robert C. Hine
1.1 INTRODUCTION: A TRADING WORLD
Increasing openness to international trade has been one of the most
conspicuous features of the global economy in the second half of the
twentieth century. Trade growth has consistently outpaced income
growth, and there are no reasons to doubt that this trend will continue
in the next millennium. International trade has boomed because it was
freed of numerous barriers that had previously obstructed exchanges
across country borders. Barriers to trade fell both through advances
in technology, most importantly in the transport and telecommunica
tion sectors, and through policy-led liberalization. Policy liberalization
occurred at the global level, mainly through successive rounds of
GATT negotiations, as well as among numerous regional country
groups. As the significance of national boundaries diminishes, econom
ies become more exposed to international competitive pressures to
which they must adapt or face economic decline.
The normative conclusions from economic theory are unchar
acteristically consistent when it comes to free trade. With the exception
of a few highly specific scenarios, theory tells us that complete trade
liberalization produces net gains in economic welfare. International
specialization and competition enhance the quantity and variety of
attainable output. However, trade theory also suggests that the re
moval of trade barriers can impact considerably on countries' pro
duction structures and income distributions, and that the net welfare
effects of incomplete liberalization can be ambiguous. Even where
economic integration is a positive-sum game, it produces losers as well
as gainers. A focal issue in this debate are the transitional costs which
occur as economies adapt to international competition. Some adjust
ments may be easily accomplished - such as minor product re-design.
Others may be more far-reaching and difficult to achieve quickly, in
particular when they necessitate occupational or geographical mobility
of the work force. The severity of trade-related economic restructuring
is, therefore, a hotly debated topic in international economics as well
as in public policy discourse. Given the likely continuation of trade
