THE DETERMINANTS OF INTRA-INDUSTRY SPECIALIZATION IN UNITED STATES TRADE

This paper attempts to explain the determinants of intra-industry specialization in the United States by reference to industry as well as country characteristics. It is shown that the extent of intra-industry trade is positively correlated with product differentiation, marketing costs, the variability of profit rates, and offshore procurement, and it is negatively correlated with economies of scale, industrial concentration, foreign direct investment, and transportation costs. It is further shown that intra-industry specialization in U.S. trade with individual countries is positively correlated with the extent of trade orientation in these countries, and it is negatively correlated with inequalities in per capita incomes and total GNP and with distance between the U.S. and the individual countries.

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