Three hypotheses that emerge from a theoretical model are discussed. Two of them concern the behavior of the share of intraindustry trade while the third concerns the volume of trade. One is that in cross-country comparisons the larger the similarity in factor composition, the larger the share of intraindustry trade. The second is that in time series data the more similar the factor composition of a group of countries becomes over time, the larger the share of intraindustry trade within the group. The third is that changes over time in relative country size can explain the rising trade-income ratio. All three hypotheses are consistent with the data. J. Japan. Int. Econ., March 1987, 1(1), pp. 62-81. Department of Economics, Tel Aviv University, Ramat-Aviv, Tel Aviv 69978, Israel.
|Number of pages
|Journal of the Japanese and International Economies
|Published - Mar 1987