Marginal Intra Industry Trade Expansion and Productivity Growth

We use the concept of marginal intra-industry trade (MIIT) to analyse the effect of trade expansion on labour productivity growth across 23 EU countries and 94 manufacturing sectors in 1995-2005. The highest MIIT index values are found in sectors producing differentiated goods as well as in science and scale-intensive sectors, while the lowest are found in resource and labour-intensive sectors. Thus specialisation in sectors characterised by traditional comparative advantage has been associated with slower productivity growth. The results indicate that a trade-flow expansion characterised by intra-industry trade (high MIIT) is associated with faster productivity growth also after we control for the size in trade flow changes. Especially the increase in imports seems important. The analysis is mostly done using random-effects linear model specifications but further evidence is presented using several other estimation methods.

Publication info

Series
Discussion Papers no. 1164
Date
2008
Keywords
productivity, growth, marginal intra-industry trade
Avainsanat
tuottavuus, kasvu, marginaalinen ristikkäiskauppa
Jel
J24,F1,C23
Pages
21
Price
10 €
Language
English