EuroEconomica, Vol 33, No 2 (2014)

Romanian intra-industry trade: A panel data approach

Nuno Carlos Leitão, Marius-Razvan Surugiu, Camelia Surugiu


This research examines the determinants of intra-industry trade (IIT) in the automobile components sector in Romania. Following previous studies, our manuscript applies a gravity model equation with panel data. The dependent variable used is IIT in automobile components. The analysis of the determinants of IIT is undertaken using a panel approach. The panel data models were estimated with Pooled OLS, fixed effects (FE) and random effects (RE) estimators. The results are presented with country characteristics as explanatory variables, and the models have four statistically significant variables. This research adds significant contribution to the intra-industry trade topic. Little academic attention has been devoted to the Romanian experience. The trade in the automobile components sector between Romania and some European countries (Austria, Belgium, Bulgaria, Croatia, Czech Republic, France, Germany, Hungary, Italy, Netherlands, Poland and Turkey) was examined, between 1995 and 2008. Using a panel data approach, the results show a positive correlation between endowments and IIT. The results indicate that the Romanian IIT is explained by differentiated quality, i.e. vertical specialization. Our study also consider economic dimension, this proxy confirms the positive effect of IIT, and so the market size is important to differentiated product. The economic model also confirms the hypothesis that volume of trade increases if the transportation costs decreases


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