COUNTRY SPECIFIC EFFECTS OF DIFFERENCES IN FACTOR ENDOWMENTS ON INTRA-INDUSTRY TRADE - ILLUSTRATED BY THE DANISH CASE

This article throws light on the subject whether there are country specific effects of differences in factor endowments on intra-industry trade. We conduct an econometric analysis of the Danish intra-industry trade in both horizontally and vertically differentiated products to examine whether determinants based on trade theory can explain this trade. Basically, we find a relationship between differences in factor endowment between trade partners on one side and the two types of intra-industry trade on the other. As regards horizontally intra-industry trade, the effect of differences in physical capital seems not to be country specific. As regards vertically intra-industry trade. the relationship is not simple and a country specific dependency of the effect of differences in endowment of technological capital is pointed out.