Dear Sheetal,

As a degree thesis has shown, in principle, the intra-industry trade of agricultural products between different countries (import and export) is much lower than that of industrial products. This performance is very dependent on the classification used to record foreign trade. Generally these international classifications are based on the classification used in the customs tariffs. Because of the long tradition of trade in agricultural products, the classification of agricultural products to the finest level is very detailed. Even excessively detailed. While with regard to industrial products, it is more aggregated. There are therefore doubts about the comparability of the data of agriculture with industry in this field of study. The higher the level of aggregation of the statistics (of import / export) the greater the intra-industry trade. At the level of 5-digit, an horizontal trade between  agricultural products is unlikely, unless that trade is seasonal trade,  involving the North and the South of the world, as in the case of pears (the Italy imports pears from Argentina in April, but exports them abroad in November). My advice is to think very carefully at what level of aggregation your database has to be built.

Best regards

Margherita

Are you interested to the   Doctoral Thesis mentioned below? I enclosed an Abstract.

In the case write me.

Margherita

Author

Anishchenko, Yury

Supervisor

CHANG, TING FA

Research Centre: 

DIPARTIMENTO INGEGNERIA CIVILE E ARCHITETTURA - DICA

Title: 

INTRA-INDUSTRY TRADE: THE CASE OF EUROPEAN UNION’S AGRI-FOOD SECTOR

Abstract

This thesis is concerned with two basic issues. First, whether the existence of intra-industry trade is a real phenomenon of the modern trade patterns or merely a “statistical artifact” due to “categorical aggregation” in the compilation of international trade statistics. There has been considerable debate on this issue with inconclusive results. Balassa (1967, 1971, 1979), Lancaster (1960, 1980), Hesse (1974), Grubel and Lloyd (1975), Aquino (1978), Linder (1961) argue that intra-industry trade is a stable characteristic of an industry, and, therefore, is a real phenomenon on both theoretical and empirical grounds. On the other side, critics like Finger (1975), Lipsey (1976), Tiberi (1981), Gray (1979), and Pomfret (1978) argue that intra-industry trade is mainly a statistical illusion. Doubt arises as a result of data compilation. It is maintained that the trade data are arbitrarily grouped in industry products that are produced using different input mixes and are not close substitutes. These economists assert that intra-industry trade would disappear if narrower group definitions were used. While this seems to be a partially satisfactory explanation for the apparent contradiction of the one market one price principle, it probably constitutes a retreat from, rather than an indication of, the Hecksher-Ohlin hypothesis. In order to avoid this doubt various attempts have been made to estimate the intensity of IIT at finest levels of disaggregation. Different measures of IIT have been computed and analyzed. The empirical results are documented in Chapter 3. These results indicate the importance of intra-industry trade in EU’s agri-food trade. The second issue arose with respect to identify and understand the nature of intra-industry trade flows and to empirically analyze the potential country-specific and industry-specific determinants of IIT in EU. Specifically to shed light on the different types of intra-industry trade (Abd-el-Rahman 1991, Fontagné and Freudenberg, 2001, Moro-Egido, 2010), depending on the type of product differentiation prevailing in each industry; on the framework for analyzing the competitiveness of trade flows by the price and quality competition in IIT between EU-countries (AIGINGER, 1997,1998, Gelhar and Pick, 2002, Ninni, 2006); on the relationship between IIT and various economic factors relating country attributes and industry characteristics (Bergstrand, 1982, Helpman and Krugman, 1985, Anderson and van Wincoop, 2003). Various testable hypotheses have been drawn from the emerging theoretical discussion in Chapter Four. The methodology involving the measurement of IIT has been analyzed in Chapter Three. Different values of IIT indices have been computed and examined in also in Chapter Four and Three. These estimated values of IIT indices have been used as dependent variables in relation to the determinants of IIT. The empirical tests of these hypotheses are presented and examined in Chapter Four. These results indicate the importance of vertical intra-industry trade in agri-food market of European Union.

Thanks a lot mam Ting Fa Margherita Chang  for valuable addition.  I will be very thankful if you can provide me aforesaid thesis on e-mail [email protected]. 

Mam basically, i am measuring sugar Intra industry trade of India with its major sugar trading partners at HS 6 level.  As you have added that level of IIT declines, it is utmost universal with my data. furthermore, i am facing a problem that among four classification of  (Product: 17 Sugars and sugar confectionery), there are two categories in which india is having significant IIT and two categories have inconsistent trade. Please guide me whether i should forward with aggregated data or dis aggregated data of complete data categories.

Kind regards

Sheetal

One more thing, mostly trade is found to be vertical in nature as measured by Greenway (1995) methodology. Thanks again mam for giving valuable suggestions.

Do you know this intra-industry trade in a product which derives from sugarcane?

The year 2010 introduced a new phenomenon into the global biofuels economy: the mutual exchange of bioethanol between Brazil and the United States of America – the most important producers, consumers and traders of ethanol – one produced primarily from sugarcane, the other primarily from maize, which is physically indistinguishable. Ethanol intra-industry trade, as the phenomenon is known by now, remained small in volume until the end of 2010 and therefore went unnoticed or was discarded as irrelevant in the global context. The large increases in ethanol intra-industry trade between the two countries seen during 2011, however, make it difficult to ignore the phenomenon. Here we pose the question regarding its underlying causes and the associated economic and environmental costs and assert that under current policies, intra-industry trade is likely to increase, and potentially, to unsustainable levels.

http://www.fao.org/3/a-ap869e.pdf

The statistical illusion should be avoided. This is much more common in processed products rather than agricultural products. See the example above. The final product (ethanol) is the same, but the derivation of the product in the value chain is different. It follows that here we are not in the presence of a differentiated product, but in that of a product equal. It is, however, derived from different agricultural products.

About your questions, we tried only with annual crops such as pears and tomatoes. In both we did not find any intra-industry trade over the 5-digit. Is sugarcane a biennial crop or an annual crop?

Surely you are using this classification

170111  Cane Sugar (Raw Sugar Not Added Flavouring or Coloring Matter)

170112  Beet Sugar (Raw Sugar Not Added Flavouring or Coloring Matter)

170191  Cane or Beet Sugar, Chemically Pure Sucrose(Added Flavouring or Coloring Matter)

170199  Other Cane or Beet Sugar, Chemically Pure Sucrose

I think you found IIT in the  last two and not in the first two because the last two are not similar product but different products.

Also from the consumer's  point of view they are not perfect surrogates.

For the moment I stop here.

Good bye

Marg