Economic interactions among high-income developed countries are characterized by high degrees of both intra-industry trade and intra-industry affiliate production and sales. Similar high-income countries both heavily trade with and invest into each other. This paper examines the determinants of Italian intra-industry trade and intra-industry production with most European trading partners using a dataset where variables are different not only between countries but also between sectors of the same country. Using different econometric methods, the results obtained suggest that intra-industry trade and intra-industry production tend to share the same determinants; in particular they are higher as the two partner countries are more similar in relative factor endowments (physical and technological capital), in relative country size and are less geographically distant. Keywords: Intra-industry Trade, Intra-industry Foreign Direct Investment

Filippo Reganati, Rosanna Pittiglio, in "STUDI ECONOMICI " 91/2007, pp. 75-89, DOI: