Patterns and determinants of intra-industry trade in agri-food products between Bosnia and Herzegovina and CEFTA 2006

Abstract

The paper aims to identify patterns and country-specific determinants of\n intra-industry trade (IIT) in agri-food products between Bosnia and\n Herzegovina (BiH) and other CEFTA 2006 parties in the period 2008-2018. The\n purpose of the paper is to contribute to filling the gap in the empirical\n literature on IIT of the South East European countries, especially in regard\n to non-manufacturing sectors. To investigate IIT intensity and structure the\n analysis employed Grubel- Lloyd indices and GHM methodology based on\n relative unit values. In order to examine the impact of various determinants\n on IIT in agri-food products, a random-effects Heckman selection model was\n estimated, following a sector-level approach in the analysis. The analysis\n indicates a lower level of IIT than expected and a strong dominance of its\n vertical type in all BiH bilateral relations within CEFTA 2006. The\n empirical results also suggest that the major determinants positively\n affecting IIT in agri-food products include the size of the trading\n economies, the similarity in their ethnic structure, membership in the\n common regional trade agreement, and common borders. By contrast, the\n results indicate that IIT is negatively affected by differences between the\n trading economies in terms of productivity and gross domestic product per\n capita.