Does intra-industry specialisation enhance or limit comparative advantage? Evidence from the world citrus fruit trade

https://doi.org/10.17221/163/2022-AGRICECONCitation:

Pawlak K., Lukasiewicz J. (2022): Does intra-industry specialisation enhance or limit comparative advantage? Evidence from the world citrus fruit trade. Agric. Econ. – Czech, 68: 338–347.

download PDF

In this paper, we aim to identify the intensity and nature of intra-industry specialisation in the global trade in citrus fruits. We used data from the United Nations Comtrade database. We performed both static and dynamic assessments of the intensity of intra-industry trade (IIT) by using the traditional Grubel-Lloyd index and the marginal IIT (MIIT) index, respectively. We also separated IIT into horizontal and vertical trade, and we verified the relationship between changes in the intra-industry pattern of trade and the level of comparative advantage gained by the largest producers and exporters of citrus fruits in the world. We used the revealed symmetric comparative advantage (RSCA) index to evaluate the level of international competitiveness. Conducting these analyses allowed us to fill the existing research gap by identifying the nature of IIT in products with specific quality characteristics but at a lower processing stage. The study's results indicated that the stronger the IIT or the more intensive shifts toward deepening the intra-industry specialisation, the lesser the comparative advantage of a country in the global export of citrus fruits. Nevertheless, the increased intensity of intra-industry specialisation does not always lead to a deterioration in the value of the trade balance.

References:
Abd-el-Rahman K. (1991): Firms' competitive and national comparative advantages as joint determinants of trade composition. Review of World Economics, 127: 83–97. https://doi.org/10.1007/BF02707312
 
Balassa B. (1965): Trade liberalisation and 'revealed' comparative advantage. The Manchester School, 33: 99–123. https://doi.org/10.1111/j.1467-9957.1965.tb00050.x
 
Bojnec Š., Fertő I. (2012): Complementarities of trade advantage and trade competitiveness measures. Applied Economics, 44: 399–408. https://doi.org/10.1080/00036846.2010.508725
 
Bojnec Š., Fertő I. (2016a): Patterns and drivers of the agri-food intra-industry trade of European Union countries. International Food and Agribusiness Management Review, 19: 53–74.
 
Bojnec Š., Fertő I. (2016b): Export competitiveness of the European Union in fruit and vegetable products in the global markets. Agricultural Economics – Czech, 62: 299–310. https://doi.org/10.17221/156/2015-AGRICECON
 
Brülhart M. (2009): An account of global intra-industry trade, 1962–2006. The World Economy, 32: 401–459. https://doi.org/10.1111/j.1467-9701.2009.01164.x
 
Brülhart M., Elliott R. (1998): Adjustments to the European single market: Inferences from intra-industry trade patterns. Journal of Economic Studies, 25: 225–247. https://doi.org/10.1108/01443589810215360
 
Camanzi L., Malorgio G., Regazzi D. (2003): Agri-food Turkish trade: Structure, competitiveness and relation with the EU. New Medit, 2: 25–36.
 
Cimpoies L., Coser C. (2017): Intra-industry trade in agricultural and food products: The case of Moldova. Scientific Papers Series Management, Economic Engineering in Agriculture and Rural Development, 17: 43–50.
 
Comtrade (2022): UN Comtrade Database. [Dataset]. United Nations (UN). Available at https://comtrade.un.org/data/ (accessed Feb 8, 2022).
 
Crescimanno M., Galati A., Bal T. (2014): The role of the economic crisis on the competitiveness of the agri-food sector in the main Mediterranean countries. Agricultural Economics – Czech, 60: 49–64. https://doi.org/10.17221/59/2013-AGRICECON
 
Dadakas D. (2019): Intra-industry trade in agricultural and food products: The case of Greece prior and during the debt crisis. German Journal of Agricultural Economics, 68: 195–216.
 
Falvey R.E. (1981): Commercial policy and intra-industry trade. Journal of International Economics, 11: 495–511. https://doi.org/10.1016/0022-1996(81)90031-3
 
FAOSTAT (2022): FAOSTAT Data. [Dataset]. Food and Agriculture Organization of the United Nations (FAO). Available at https://www.fao.org/faostat/en/#data (accessed Apr 7, 2022).
 
Garcia Álvarez-Coque J.M., Martinez-Gomez V., Jordán Galduf J.M. (2012): Agricultural globalization and Mediterranean products. In: MediTERRA 2012: The Mediterranean Diet for Sustainable Regional Development. Paris, France, International Centre for Advanced Mediterranean Agronomic Studies (CIHEAM), Presses de Scinces Po: 345–367.
 
Globerman S., Dean J.W. (1990): Recent trends in intra-industry trade and their implications for future trade liberalization. Weltwirtschaftliches Archiv, 126: 25–49. https://doi.org/10.1007/BF02706310
 
Grant J.H., Peterson E., Ramniceanu R. (2015): Assessing the impact of SPS regulations on U.S. fresh fruit and vegetable exports. Journal of Agricultural and Resource Economics, 40: 144–163.
 
Greenaway D., Hine R., Milner C. (1994): Country-specific factors and the pattern of horizontal and vertical intra-industry trade in the UK. Weltwirtschaftliches Archiv, 130: 77–100. https://doi.org/10.1007/BF02706010
 
Greenaway D., Milner C. (1983): On the measurement of intra-industry trade. The Economic Journal, 93: 900–908. https://doi.org/10.2307/2232755
 
Grubel H.G., Lloyd P.J. (1975): Intra-Industry Trade: The Theory and Measurement of International Trade in Differentiated Products. New York, US, Wiley: 205.
 
Hamilton C., Kniest P. (1991): Trade liberalization, structural adjustment and intra-industry trade: A note. Review of World Economics, 127: 356–367.
 
Helpman E., Krugman P.R. (1985): Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy. Cambridge, US, MIT Press: 272.
 
Hoang V. (2019): The dynamics of agricultural intra-industry trade: A comprehensive case study in Vietnam. Structural Change and Economic Dynamics, 49: 74–82. https://doi.org/10.1016/j.strueco.2019.04.004
 
Jambor A., Balogh J., Kucsera P. (2016): Country and industry specific determinants of intra-industry agri-food trade in the Baltic Countries. Agricultural Economics – Czech, 62: 280–291. https://doi.org/10.17221/153/2015-AGRICECON
 
Jambor A., Leitão N.C. (2016): Industry-specific determinants of vertical intra-industry trade: The case of EU new member states' agri-food sector. Post-Communist Economies, 28: 34–48. https://doi.org/10.1080/14631377.2015.1124553
 
Jing W. (2018): The competitiveness and its stability of fruit products: The case of China. Custos e @gronegócio, 14: 90–111.
 
Krugman P.R. (1979): Increasing returns, monopolistic competition, and international trade. Journal of International Economics, 9: 469–479. https://doi.org/10.1016/0022-1996(79)90017-5
 
Lancaster K. (1979): Variety, Equity and Efficiency: Product Variety in an Industrial Society. New York, US, Columbia University Press: 373.
 
Laursen K. (1998): Revealed Comparative Advantage and the Alternatives as Measures of International Specialisation. DRUID Working Paper No. 98–30. Copenhagen, Danish Research Unit for Industrial Dynamics, Copenhagen Business School, Department of Industrial Economics and Strategy: 24.
 
Leitão N.C. (2011): Intra-industry trade in the agriculture sector: The experience of the United States. African Journal of Agricultural Research, 6: 186–190.
 
Leitão N.C., Faustino H.C. (2008): Intra-industry trade in the food processing sector: The Portuguese case. Journal of Global Business and Technology, 4: 49–58.
 
Majkovič D., Bojnec Š., Turk J. (2007): Development of new members' EU trade: Evidence from the Slovenian agri-food sector. Post-Communist Economies, 19: 209–223. https://doi.org/10.1080/14631370701312303
 
Melo O., Engler A., Nahuehual L., Cofre G., Barrena J. (2014): Do sanitary, phytosanitary, and quality-related standards affect international trade? Evidence from Chilean fruit exports. World Development, 54: 350–359. https://doi.org/10.1016/j.worlddev.2013.10.005
 
Onogwu G.O. (2014): Determinants of the intra-industry trade in cereal and miscellaneous edible preparations: The evidence for Nigeria and the ECOWAS partners. Agricultural Economics – Czech, 60: 21–30. https://doi.org/10.17221/18/2013-AGRICECON
 
Pawlak K. (2019): Intensity and structure of intra-industry trade in agri-food products observed in Polish and EU foreign trade with the US. Annals PAAAE, 21: 374–382. https://doi.org/10.5604/01.3001.0013.5812
 
Qasmi B.A., Fausti S.W. (2001): NAFTA intra-industry trade in agricultural food products. Agribusiness, 17: 255–271. https://doi.org/10.1002/agr.1015
 
Rasekhi S., Shojaee S.S. (2012): Determinant factors of the vertical intra-industry trade in agricultural sector: A study of Iran and its main trading partners. Agricultural Economics – Czech, 58: 180–190. https://doi.org/10.17221/13/2011-AGRICECON
 
Rickard B.J., Lei L. (2011): How important are tariffs and nontariff barriers in international markets for fresh fruit? Agricultural Economics, 42: 19–32. https://doi.org/10.1111/j.1574-0862.2011.00549.x
 
Sharma K. (2002): How important is the processed food in intra-industry trade? The Australian Experience, 29: 121–130. https://doi.org/10.1108/01443580210420781
 
Smutka L., Maitah M., Svatoš M. (2018): Changes in the Czech agrarian foreign trade competitiveness – Different groups of partners' specifics. Agricultural Economics – Czech, 64: 399–411. https://doi.org/10.17221/399/2016-AGRICECON
 
Widodo T. (2009): Comparative advantage: Theory, empirical measures and case studies. Review of Economic and Business Studies, 4: 57–82.
 
download PDF

© 2022 Czech Academy of Agricultural Sciences | Prohlášení o přístupnosti