Vertical Intra-Industry Trade and the EU Accession: The Case of Hungarian Agri-Food Sector
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The aim of this paper is to examine the relationship between the factor endowment and the
pattern of intra-industry trade. Our empirical analysis relates to Hungary’s intra-industry trade
in agri-food products with 26 member states of the EU over the period 1999-2010.
Estimations reject the comparative advantage explanation of vertical intra-industry trade and
provide partial support the prediction of Flam and Helpman model. Findings highlight that
nature of factor endowments play also important role in explanation of vertical intra-industry
trade. Other variables like market size and distance confirm the theoretical expectations. In
addition, trade with new member states positively, whilst the EU accession ambigouosly
influence the share of vertical IIT.