What Have We Learned from a Generation ’ s Research on Intra - Industry Trade ?

This paper evaluates the research that has taken place on intra-industry trade (IIT) since the publication of Grubel and Lloyd’s pioneering volume on the subject in 1975. The evaluation of the development of the literature is organised around the themes of measurement, explanation and policy. The paper identifies significant progress on all these themes. We now have a robust theoretical framework for explaining IIT and better measurement and econometric tools for documenting alternative types of IIT and for testing alternative models of IIT. Finally, although the welfare and adjustment effects of IIT may be different or more complex than in the case of inter-industry trade and there may be new specific arguments for protection, they do not provide a general case for interventionist trade policies. JEL classification: F12, F14