Technical Report On the stability of intra-industry trade

Hayakawa, Kazunobu  ,  Okubo, Toshihiro  ,  Ito, Tadashi

5422015-10-01 , Institute of Developing Economies (IDE-JETRO) 
This paper presents the novel finding that two-way intra-industry trade (IIT) in product–country pairs is very unstable over time by using disaggregated trade data of OECD countries. Many products frequently switch among two-way, one-way and zero trade over time. To measure the stability of two-way trade, we propose a measure that we refer to as the "IIT stability index". Our estimation results using the proposed measure show that two-way trade involving markets of different sizes and long distance are likely to be unstable. In addition, primary products are more unstable than manufactured products.

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