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Marginal Intra-Industry Trade and Adjustment Costs in the Hungarian Food Industry

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  • Ferto, Imre

Abstract

Recent developments in intra-industry trade (IIT) literature focus on the relationships between IIT and adjustment costs associated with changes in trade pattern. The effects of trade liberalisation depend, inter alia, on whether trade is of an inter-industry or intra-industry nature. The belief that IIT leads to lower costs of factor market adjustment, particularly for labour, gives rise to the smooth-adjustment hypothesis Hungarian agricultural trade was liberalised via WTO agreement and some regional trade integration agreement (Association Agreement, CEFTA). It is reasonable assume that these partial trade liberalisation should have an effect on trade pattern and employment changes. The aim of the paper is to identify the effects of partial trade liberalisation on adjustment costs in Hungarian food industry employing recent developments in the IIT literature. The structure of Hungary's food trade expansion over the transition period 1992-2002 and its implications for labour-market adjustment is examined. An econometric analysis of trade and employment data suggests that changes in domestic consumption and productivity have significant influence on employment changes. But our results do not provide support for the smooth-adjustment hypo thesis of intraindustry trade.

Suggested Citation

  • Ferto, Imre, 2006. "Marginal Intra-Industry Trade and Adjustment Costs in the Hungarian Food Industry," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25758, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae06:25758
    DOI: 10.22004/ag.econ.25758
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    References listed on IDEAS

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    1. Marius Brülhart & Robert J.R. Elliott, 1998. "Adjustment to the European single market: inferences from intra‐industry trade patterns," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 25(3), pages 225-247, June.
    2. Marius Brülhart & Robert C. Hine (ed.), 1999. "Intra-Industry Trade and Adjustment," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-27173-3, December.
    3. Marius Brülhart, 1994. "Marginal Intra-Industry Trade: Measurement and Relevance," Economics Technical Papers 942, Trinity College Dublin, Department of Economics.
    4. Marius Brülhart & Robert Elliott, 2002. "Labour-market effects of intra-industry trade: Evidence for the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(2), pages 207-228, June.
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