Patterns and determinants of horizontal and vertical IIT of regions: panel analysis for Spain & Poland
Tomasz Brodzicki , Tomasz Jurkiewicz , Laura Marquez-Ramos , Stanisław Umiński
AbstractMost of the empirical studies in the literature on intra-industry trade and on the factors affecting trade are performed on the country level. Countries, however, differ in terms of granularity and internal heterogeneity at the regional level. This internal differentiation in terms of intra industry (IIT) patterns, which could affect countries’ overall trade pattern, is thus not typically taken into account. In contrast, in the present study – using a unique dataset – we conduct an analysis at the level of NUTS2 regions of two large EU Member States (Poland and Spain) of similar size, level of development, a number of regions and the extent of international regional diversity. This allows drawing more thorough and robust conclusions, as regards the nature of IIT and its determinants. IIT is measured at the 4-digit level of products CN classification. We first describe the overall pattern of IIT for regions, and then empirically identify the determinants of overall IIT as well as its horizontal and vertical components in trade the Spanish and Polish NUTS-2 regions with all existing trade partners on bilateral basis over the period 2005-2014. In order to obtain unbiased results, we utilise a novel empirical approach - a semi-mixed effect model, estimated with the Poisson Pseudo Maximum Likelihood estimator. We estimate the models jointly for all Spanish and Polish regions and then disjointly in a comparative manner – in order to identify incongruities of reaction to various factors investigated. These include both traditional factors, postulated by the standard theoretical models, as well as a number of factors related to the regional dimension of our analysis such as regional path dependence, quality of regional institutions or the core or peripheral nature of reporting region. The study contributes significantly to the analysis of determinants of IIT. We go beyond the traditional approach to IIT analysis (focused on countries). By treating regions as small open economies, participating in international trade, we are able to show new, interesting aspects of IIT and its determinants.
|Publisher name (outside publisher list)||Instytut Rozwoju|
|Publishing place (Publisher address)||Sopot|
|Book series /Journal (in case of Journal special issue)||Working Papers, ISSN 2082-7318, (0 pkt)|
|Publication size in sheets||2.35|
|Keywords in English||intra-industry trade, horizontal & vertical IIT, semi-mixed effects model, PPML, Poland, Spain|
|Not used for evaluation||yes|
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