| Abstract: | This paper analyses determinants of intra-industry trade in food processing for a 30-country sample over the period 1964–85. Previous studies have tested the hypothesis that imperfect competition is a major determinant of intra-industry trade (IIT) in the durable goods manufacturing sectors. This study is distinguised from the earlier studies of IIT by; the examination of the processed food sector (SIC=20), the use of a panel data set for 22 years and 30 countries available at the four-digit SIC level, the use of purchasing power parity measures of GDP, and the use of a weighted tobit model with fixed effects to account for the censored cross-section time-series nature of the date. The results indicate that ITI in food processing is a positive function of a country's GDP per capita and equality if GDP per capita between countries. In addition, it is also found that such trade is strongly influenced by distance between trading partners, membership in customs unions and free trade blocs, and also exchange rate volatility. |
