Determinants of horizontal and vertical intra-industry agri-food trade: the cases of Bulgaria and Romania

Jámbor, Attila

Keywords: intra-industry trade, determinants, Bulgaria, Romania

The article analyses patterns and country-specific determinants of the agri-food trade of Bulgaria and Romania with the European Union. As literature focusing on ag-ricultural aspects of the topic is limited, the paper seeks to contribute to the literature by providing up to date results and suggestions as well as by identifying the determi-nants of horizontal and vertical intra-industry trade of Bulgaria and Romania after ac-cession to the European Union (EU). The results verify that agri-food intra-industry trade is mainly vertical in nature in both countries, suggesting trade in different quality products. However, low values for total inter-industry trade (IIT) indicate such trade that prevails in the agri-food trade of both countries. The results of the predefined econometric model suggest that there is a negative relationship between factor en-dowments and horizontal IIT, while relationship is ambiguous between factor endow-ments and vertical IIT, indicating that countries with similar factor endowments trade products of similar quality, while those with different factor endowments trade differ-ent quality products. The results also highlight that differences in economic sizes are positively associated with IIT, suggesting that countries with different sizes are more likely to have IIT trade patterns. Moreover, the article identifies a negative relationship between distance and IIT meaning that geographical proximity fosters agri-food IIT. These results are mainly in line with those of previous research in the region.

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