Reconsidering the adjustment costs of the Europe agreements

Abstract

The paper argues that vertical intra-industry trade (IIT) should be separated from horizontal IIT to have a better judgement about adjustment costs of a trade liberalization, contrary to the assumption in the literature that all IIT changes are costless. A simple method to decompose IIT is presented. Using this method, it is seen that, contrary to expectations, after the Europe Agreements, share of vertical IIT has not increased much between Germany and Central and Eastern European countries. However, when adjustment costs are analysed, it is seen that the resulting labour displacement has been substantial, explaining partly the EU's reluctant approach in these agreements.

Bilateral intra-industry trade flows and intellectual property rights protection: first empirical evidence

“…year 1995 and 2000). In measuring and disentangling total intra-industry trade (IIT) into horizontal IIT (HIIT) and vertical IIT (VIIT), the methodology of Kandogan (2003) 2 has been used. Data for the dependent variables (IIT, HIIT and VIIT) cover the South African manufacturing sector and are measured in terms of US dollars at constant 1995 prices.…”

“…For the methodology of disentangling the total intra-industry trade (IIT) into vertical and horizontal intra-industry trade please refer toKandogan (2003).…”

Vertical Specialization and New Determinants of FDI: Evidence from South and East Asia

“…Host-countries with important bilateral vertical specialization-production links with the source-countries are expected to attract more inward FDI from those investing countries than host-countries with no or little such links. Vertical specialization links are proxied in this study by the bilateral vertical intra-industry trade (VIIT) measure, proposed by Kandogan (2003). This measure indicates the cross-border exchange of goods at different stages of production within an industry and differs from indices that measure VIIT on the basis of trade in vertically differentiated products, where products are differentiated by quality.…”

The effect of outsourcing on the demand for skills in the Spanish manufacturing industry

“…Some studies, such asKandogan (2003), have proxied outsourcing with the level of vertical intra-industry trade. 2 Skilled workers are proxied by workers with tertiary education.…”