The study has used the Relative Trade Advantage (RTA) and GrubelLloyd (GL) indexes to measure the pattern of inter-industry and intra-industry specialization
between Lithuania and the EU.
Determinants of Intra-Industry Specialization in the United States, Oxford Economics Papers, 38(2): 220-233.
Intra-Industry Specialization and the Gains from Trade, Journal of Political Economy, 89(5): 959-973.
Our intention is, precisely, to estimate this relationship in European Union, euro zone and evaluate, also, the particular case of Portuguese economy to understand if these countries follow a Krugman-type specialization (inter-industry) or an intra-industry specialization.
(8) In general, independently of the trade indicator used to compute bilateral trade intensity--exports, imports, or total trade--the results confirm the Frankel and Rose argument and suggest an intra-industry specialization profile.
The estimated [beta]s validate the endogeneity hypothesis and suggest an intra-industry specialization process that is contributing to business cycles correlation.
Balassa (1966) introduced one of the first measures of a country's intra-industry specialization:
Eede, 1982, Inter-Industry versus Intra-Industry Specialization in Exports and Imports, Journal of International Economics, 12: 363-369.
Given this apparent link between horizontal and vertical intra-industry specialization and level of economic development, the aggregate economic effect of higher indicators of intra-industry trade may give rise to entirely different outcomes in terms of buttressing growth and development, depending on the kind of product differentiation individual countries can access.
The former indicates complete intersectoral specialization, or the reference country exports goods that differ from its imports, while the latter indicates complete intra-industry specialization, or the reference country exports and imports goods in the same category.
and imports tend to match each other in industry i, the index approaches zero and signifies, according to Balassa, a high degree of intra-industry specialization
. Grubel and Lloyd (1975) criticize Balassa's index both because it is a simple arithmetic mean of each industry's index (and thus fails to reflect the different weights of each industry), and because it does not take account of the need to correct for aggregate trade imbalances.
Second, intra-industry specialization
(1 > SI > 2) is not sufficiently expanded in both countries.