Drivers of vertical intra‐industry trade: the case of the Hungarian agri‐food sector

This article investigates the drivers of vertical intra‐industry trade (VIIT) in Hungarian agri‐food trade with the European Union (EU). It identifies three possible ways to measure intra‐industry trade (IIT) flows (GHM, FF, and N methods) and defines six hypotheses to test for the drivers of VIIT with three panel data models (static, dynamic, and FEVD). The results suggest that factor endowments are negatively, while economic size is positively and significantly related to VIIT. Distance and VIIT were found to be negatively related as is commonly the case in the standard gravity model. It was also found that VIIT is greater if a New Member State (NMS) is exporting agri‐food produce to an NMS, while EU accession has ambiguously influenced the share of VIIT. In general, it seems that our results are independent from model estimations and interestingly they do not differ considerably as we a priori expected. Moreover, our results seem surprisingly robust across various measurements of ITT.     

Labour Market Adjustment and Intra‐Industry Trade: The Effects of Association on the Hungarian Food Industry

The structure of Hungary’s food trade expansion over the period 1995–2003 and its implications for labour market adjustment are examined. The contributions of the paper are threefold. First, we test the sensitivity of results to the choice of measurement and their implications for the results. Second, we introduce more industry‐specific control variables. Third, we distinguish the short‐ and long‐run adjustment effects. Our results provide some support for the smooth‐adjustment hypothesis of intra‐industry trade. Estimations confirm that industry‐specific variables may have a significant effect on adjustment costs.     

The Utilisation of Trade Preferences for Developing Countries in the Agri‐food Sector

Both the European Union and the United States grant non‐reciprocal preferences to developing countries under the Generalised System of Preferences as well as under several regional schemes. The benefits of these preferences have recently been questioned. Several authors have pointed out the under‐utilisation of these preferences due to the constraints attached. There have been claims that rules of origin requirements and administrative costs, as well as uncertainty on eventual eligibility, have deterred exporters from using preferential regimes. We calculate various indicators of the utilisation of preferences in the agricultural, food and fisheries sector. We conclude that only a very small proportion of the imports eligible for these preferences is actually exported outside a preferential regime. The rate of utilisation is therefore high. However, the flow of imports from the poorest countries remains very limited in spite of rather generous tariff preferences, which leads to questions over the overall impact of the preferential agreements. In addition, preferential regimes overlap, and in such cases some regimes are systematically preferred to others. We use econometric estimates of the (latent) cost of using a given preference to explain why particular regimes are used. We focus on possible explanations, such as the cumulation rules (that restrict the use of materials originating from other countries), fixed administrative costs and differences in the preferential margin.     

The Effects of Non‐tariff Measures on Agri‐food Trade: A Review and Meta‐analysis of Empirical Evidence

The increasing policy interest and academic debates on non‐tariff measures (NTMs) has stimulated a growing literature on how NTMs affect agri‐food trade. The empirical literature provides contrasting and heterogeneous evidence, with some studies supporting the ‘standards as catalysts’ view, and others favouring the ‘standards as barriers’ explanation. To the extent that NTMs can influence trade, understanding the prevailing effect, and the motivations behind one effect or the other, is a pressing issue. We review a large body of empirical evidence on the effect of NTMs on agri‐food trade and conduct a meta‐analysis to disentangle potential determinants of heterogeneity in estimates. Our findings show the role played by the publication process and by study‐specific assumptions. Some characteristics of the studies are correlated with positive significant estimates, others covary with negative significant estimates. Overall, we found that the effects of NTMs vary across types of NTM, proxies used for NTMs, and levels of detail of studies. The estimated effects are also influenced by methodological issues and publication processes.     

Non‐Reciprocal Trade Preferences and the Role of Compliance Costs in the Agricultural Sector: Exports to the EU

We investigate whether non‐reciprocal preferential regimes granted by the European Union have an impact on agricultural export flows from beneficiary countries while accounting for the costs of compliance that may prevent exporters from taking full advantage of potential benefits. Compliance costs are heterogeneous and difficult to measure. We proxy their influence and specify a model that allows for a different preferential margin impact according to the proxy costs. Adopting the gravity framework and using a sample of 554 lines of agricultural products for 131 developing countries in 2002, we find that the costs of compliance play a role in making the schemes work: the lower the costs, the greater the impact of the preferential margins. Moreover, the estimated margin effect differs between different regimes.