Intra-industry Trade in Agricultural Products on intra-EC level: The Impact of the Common Agricultural Policy (CAP) Funds

This paper aims at specifying the main determinants of the intra-industry trade in agricultural products, associated with the funds of the Common Agricultural Policy (CAP)of the EC, and more precisely, with its “price support mechanism” and its “structural reform policy.” It presents CAP’s reformed main tools and mechanisms, and explains the choice of selected variables as determinants of intra-industry trade in agricultural products at intra-EC trade. The econometric analysis covers the period 1973-2005, following recent developments in time-series analysis employing the ARDL approach tocointegration. The empirical results provide evidence of Granger causal effects in bothon short-run and long-run horizon running from CAP’s above mentioned policy tools tointra-industry trade.