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Recently published studies stress the importance of trade in intermediate goods. The literature on determinants of trade, however, have largely focused on the sources of comparative advantage in determining aggregate trade flows rather than trade in intermediate goods. The purpose of this paper is to examine the role of institutional quality and trade costs to explain the determinants of trade in intermediates.

The simple model is based on the model of comparative advantage in the gravity framework used by Eaton and Kortum (2002) and Chor (2010) to relate trade flows of intermediate goods to institutional parameters, factor endowments and geography. The empirical tests use a data set containing 172 countries and 17 industries spanning ten years.

The results confirm the theoretical prediction that a country with higher institutional quality has a comparative advantage in institution-intensive goods and trade costs have a negative effect on trade. The author further finds that these effects are stronger in share of trade in intermediate goods vis-à-vis final goods.

To highlight the distinct nature of trade in intermediate goods, the author separates industry trade flows as intermediate input trade and final goods (consumption goods) trade to compare the importance of different sources of comparative advantage among different types of trade flows. Unlike Eaton and Kortum (2002) and Chor (2010) who used cross-sectional data for final goods trade, the ten-year industry-level panel data are used to compare the relative importance of institutions and geography as determinants in trade in intermediate goods compared to final goods trade and capture the macroeconomic time variant factors as well as industry–country pair characteristics. A significant caveat in gravity regression is that an empirical finding may often be driven by omitted variables. Inclusion of a set of country variables such as GDP, production costs and institutional level may still allow omitted variables to bias the estimation. To avoid this problem, the author includes a fixed effect of exporter and importer as well as industry and year, instead of a set of country characteristics.

Since its development by Tinbergen (1962), the gravity model of international trade has widely been applied to analyse the effect of various factors on trade relationships between countries. Past studies on trade gravity vary not only in the mix of model variables but also in how they have come into the analysis. This study reviews existing literature on bilateral trade with an aim to identify influential predictors such as changes of trade policy and national development strategy and highlight important yet understudied factors such as transport and logistics infrastructure, and sustainable development. To demonstrate the needs to examine these critical factors across industry sectors, the study presents the case of textiles and clothing (T&C) production and trade between China and its trading partners as an illustration. Through the literature review, it shows how the gravity model can be applied to address current issues in international trade arena such as the potential trade war between the US and China, China’s Belt and Road Initiative (BRI), and other important factors shaping global T&C trade. This study offers future research directions for analysis of global trade in the T&C industry and contributes to the wider literature of international business and trade.

After the fall of fix exchange rate regime in early 1970s, the nexus between the exchange rate volatility and trade flows has been of a great interest to the policy makers and researchers. Resultantly an extensive literature is available on the topic. However, the research findings are inconclusiveness so far. The purpose of this paper is to examine the exchange-rate volatility and bilateral industry trade link between the two important countries of Southeast Asia, i.e. Malaysia and Thailand.

This study employs Generalized Autoregressive Conditional Heteroskedasticity (GARCH) (1, 1) to measure exchange rate volatility and autoregressive distributed lag (ARDL) model to study the relationship between exchange rate volatility and trade flows. ARDL approach is suitable to accommodate the mix cases (i.e. stationary and first difference stationary). The paper considers 62 Malaysian exporting and 60 Malaysian importing industries with Thailand over the monthly period 2000-2013.

Findings suggest the influence of exchange-rate volatility on the trade flows in a limited number of industries. Large industries like instruments and apparatus experience negative influence from exchange-rate volatility.

Past literature continued to be inconclusiveness on the nexus between exchange-rate volatility and trade flows due to its over-reliance on the aggregated data. Besides, the past studies are more based on quarterly or yearly frequency data. These issues contribute to the aggregation bias. This research focusses on a country bilateral trade pair, using industry level disaggregated monthly data. Such research is rare in Malaysian-Thai bilateral trade context. This study uses a suitable estimation approach and also draws valuable implications.

Since 1960s it has been realized that the bilateral trade at international level cannot be explained solely by the classical and neoclassical models of trade based on inter-industry trade. There is an existence of export and import within the same industry among the trading partners. Intra-industry trade (IIT) for products and product groups has been empirically observed by several studies. However, there is not much literature available on IIT in services. So also, from country perspective many studies are based on IIT for advanced countries. There is not much empirical evidence available for IIT among the emerging economies. The study aims to analyze the IIT in tourism services for five major emerging economies constituting BRICS – Brazil, Russia, India, China, and South Africa. The group constitutes 41% of world population with 24% of world GDP and 16% share in world trade. The study used both static and dynamic approaches to measure the IIT between India and other BRICS nations between 2018 and 2020. To empirically estimate the IIT, the study employs Grubel and Lloyd index and Brülhart index (MIIT). The study reveals that India had a very high level of intra-tourism trade with Brazil and South Africa. While with China and Russian Federation it was moderate. Results denote a correlation between the theory of international trade and tourism. There is two-way trade in BRICS tourism flows.

The purpose of this paper is to analyse the role of the enlargement process of the European Union as a factor fostering international competitiveness of EU Member States. The paper argues that the economic integration process has reduced the technological gap between old and new EU Member States, and this pattern of technological innovation can partially explain the strong impulse on the export dynamics of European countries.

The paper builds an augmented gravity model by including the role of technological innovation, proxied by the stock of knowledge at the sector level. The authors gather together information on patents applied to international offices and bilateral export flows available from COMTRADE dataset.

By using a dynamic panel data estimator the authors find three main empirical evidences. First, the enlargement process has produced an overall larger positive impact on export flows for new Members than for old ones, and more importantly that sectors with the higher technological content have received the strongest impulse. Second, the augmented gravity model allows shaping the crucial role of technological innovation in fostering export competitiveness. Third, this impact seems to be stronger for old EU Member States than for new ones.

The major limitation concerns time span adopted in this work. By expanding the dataset to further years it could be possible to better disentangle the effects also related to the new wave of the EU enlargement.

The policy implication derived is that the more the new EU Members catch up technologically as a result of the integration process, the more they will benefit in terms of economic development.

The major originality of this paper is the construction of an augmented gravity model by including the role of technological innovation, applied to distinguished manufacturing sectors in a dynamic panel setting.

This paper aims to examine the influence of exchange rate risk on the bilateral trade of two closely connected East Asian open economies – Malaysia and Singapore – at industry level.

This study estimates import and export demand models considering 65 import and 65 export industries of Malaysia, with Singapore using monthly data over the period 2000-2014. Generalized Auto Regressive Conditional Heteroskedasticity (GARCH) model is used to measure the exchange rate risk, and autoregressive distributed lag (ARDL) approach to co-integration is used to examine the study empirical models.

The findings suggest that exchange risk has an impact on a moderate number of industries in the short run; however, this influence endures in very few industries in the long run. It is interesting to note that exchange rate volatility expedites import demand for the large Malaysian import industries like gas and plastic.

No prior study has explored the topic at industry level focusing on the bilateral trade flows between Malaysia and Singapore. This research serves important implications while thinking about exchange rate risk and trade linkage in a case of open economies trade pairs that are highly integrated in presence of a variety of bilateral trade agreements and economic groupings.

In the run‐up to the 1992 single‐market deadline, there were concerns that inter‐industry adjustment pressures among EU member countries would increase. Such expectations were due partly to a perceived reversal of the post‐Second World War growth in intra‐industry trade (IIT). Finds that average IIT levels continued to rise during the implementation of the single market. It is argued that the concept of marginal IIT(MIIT) is of greater relevance to adjustment than “static” IIT. Some evidence is shown to support this proposition, and a comprehensive set of intra‐EU MIIT indices is calculated for the 1980s. Since average MIIT levels in the 1988‐92 period were higher than in the early 1980s, this analysis also supports the conclusion that, on average, adjustment to the single market was no more disruptive than that experienced during earlier stages of European integration. It also appears that the forces for inter‐industry adjustment are stronger in traditional, declining industries, whereas the expansion of relatively advanced industries tends to be more evenly shared by the EU member countries.

Recent years have seen a rapid expansion of studies that examine the effects of exchange-rate risk on bilateral exports and imports for specific industries. Since the underlying theory is ambiguous, each case must be studied individually. This paper considers British trade with China, for 47 types of product, over the period from 1978 to 2010. Consistent with the underlying theory, cointegration analysis shows that most industries register no effect due to volatility in the long run, while some trade flows are reduced and a handful are even increased. An analysis of industry characteristics suggests that while the type of good might play little role on an industry's specific results, a product's trade share does. This is the case for UK imports of Chinese goods, perhaps because large Chinese exporters are able to successfully hedge against exchange-rate risk. The paper aims to discuss these issues.

The method is based on bounds testing approach to cointegration and error-correction modeling.

The paper arrives at two key conclusions. First, as has been shown previously for other country pairs, most industries demonstrate no long-run response to exchange-rate volatility. A fraction of industries are affected, and most of these effects are negative.

This research pertains to the case of industry trade between the UK and China only.

The paper identifies industries that are affected by exchange rate uncertainty.

No study has looked at the impact of exchange rate uncertainty on the trade flows between China and the UK at commodity level.

The purpose of this paper is to show that in some industries the linear model may not reveal any significance link between exchange rate volatility and trade flows but once nonlinear adjustment of exchange rate volatility is introduced, the nonlinear model reveals significant link.

This paper uses the linear ARDL approach of Pesaran et al. (2001) and the nonlinear ARDL approach of Shin et al. (2014) to assess asymmetric effects of exchange rate volatility on trade flows between Germany and Turkey.

This paper consider the experiences of 75 2-digit industries that trade between Turkey and Germany. When the study assumed the effects of volatility to be symmetric, the study found short-run effects in 31 (30) Turkish (German) exporting industries that lasted into the long run in only 10 (13) Turkish (German) exporting industries. However, when the study assumed asymmetric effects and relied upon a nonlinear model, the study found short-run asymmetric effects of volatility on exports of 55 (56) Turkish (German) industries. Short-run asymmetric effects lasted into long-run asymmetric effects in 10 (25) Turkish (German) exporting industries. All in all, we found that almost 25% of trade is hurt by exchange rate volatility.

This is the first paper that assesses the possibility of asymmetric effects of exchange rate volatility on German–Turkish commodity trade.

The distinction between nominal and effective tariffs (or protection) is well established in the theoretical literature, albeit in the context of the traditional analysis of inter‐industry trade flows. This analysis is based upon assumptions such as product and production homogeneity, non‐increasing returns, armslength trade, and small open economy country conditions. Relaxation of some or all of these assumptions has direct implications for effective protection analysis under any type of trade flows. As is now widely recognised, however, relaxation of these assumptions is also likely to be associated with intra‐industry specialisation and exchange. It is to this wider issue of effective protection analysis in the context of “within‐industry” specialisation (vertical and/or horizontal) and of two‐way trade, that this paper is addressed.