Economic Geography, Comparative Advantage and Trade within Industries

Economic Geography, Comparative Advantage and Trade within Industries: Evidence from the OECD

A large share of world trade, especially among the OECD countries, is twoway trade within industries, so called intra-industry trade. Despite this, few attempts have been made to examine why countries export some products with-in industries, whereas they import others. We examine this issue, by focusing on the shares of IIT that are vertical and horizontal and by examining price dispersion. The regression results suggest that an abundant human capital endowment as well as a large domestic market increases the quality of OECD-Journal countries` manufacturing exports, thus of fering support for comparative advantage models as well as newer geography models. (JEL Classifications: F12, F13)