TY  - JOUR
AU  - Markusen,James R.
AU  - Maskus,Keith E.
TI  - A Unified Approach to Intra-Industry Trade and Direct Foreign Investment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8335
PY  - 2001
Y2  - June 2001
UR  - http://www.nber.org/papers/w8335
L1  - http://www.nber.org/papers/w8335.pdf
N1  - Author contact info:
James R. Markusen
Department of Economics
University of Colorado
Boulder, CO 80309-0256
Tel: 303/492-0748
Fax: 303/492-8960
E-Mail: james.markusen@colorado.edu
AB  - Economic interactions among the high-income developed countries are characterized by high degrees of both intra-industry trade and intra-industry affiliate production and sales.  Similar high-income countries both heavily trade with and invest into each other. The purpose of this paper is to show how the theory of direct investment can now be integrated with the theory of international trade in goods, and to show how the two combine to determine the pattern of trade and foreign affiliate production. Empirical estimation gives good support to the predictions of the theory for intra-industry affiliate sales, with somewhat weaker results for intra-industry trade.  Results confirm that the intra-industry affiliate sales index rises relative to the intra-industry trade index as countries become richer and more similar in size and in relative endowments.
ER  -