Inter-Industry Specialisation versus Intra- Industry Trade: a Regional Approach

This paper aims to contribute to a better understanding of inter-industry specialisation and intra-industry trade at the regional level as a source of international trade. In particular, we have examined the changes in trade specialisation patterns at the regional level in Italy and France for the period of 1985-1996. In order to distinguish between the two types of trade specialisation (inter-industry specialisation and intra-industry trade), the empirical work was carried out using the Grubel-Lloyd index and the Aquino index. The former considers the level of IIT in a region and the latter examines the degree of inter-industry specialisation by sector. By using a weighted standard deviation of the Aquino index, we obtained a measure for the specialisation pattern of each region. Moreover, a peculiar matrix, the so called Aquino matrix, was constructed to emphasise the movements in manufacturing sectors within regions over time. The empirical results support the new trade theory, which predicts an increasing level of intra-industry trade in the core regions.