Determinants of horizontal and vertical intra-industrial trade in the manufacturing industries of Mexico

Abstract

This paper analyses the determinants of intra-industry trade (CININ), vertical (CININV) and horizontal (CININH), inside the commercial relationship between Mexico and United States, in the period 1985-2006, for 22 industries, employing Adjusted Grubel-Lloyd and Kojima indices. Estimations followed a fixed effects panel data methodology. Results indicate product differentiation, non-competitive market structures, development level, market size, market size difference and economic integration are determinants of CININ and CININV; while scale economies, non-competitive market structures, development level, per capita income difference between Mexico and US as well as difference of market size, and economic integration are determinants of CININH.