How has the Swedish intra-industry trade been affected by the Eurozone crisis?

• Main Author: Kuosku, Caroline
• Format: Others
• Language: English
• Published: KTH, Industriell ekonomi och organisation (Inst.) 2013
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:kth:diva-124118

This paper analyzes how the Swedish intra-industry trade, simultaneous import and export of goods in the same industry, has changed after the Eurozone crisis occurred year 2008. The hypothesis is associated with trade theory regarding more intense intra-industry trade between countries with similar economic structure, development and market size. The crisis-effect is assumed to decrease the two-way trade between Sweden and countries with large economic differences and stay unchanged between Sweden and countries with similar economic structures. By conducting three different models that evaluates the effects in different steps, the main findings are supporting the hypothesis. The intra-industry trade intensity has increased for the cluster of countries with low or medium difference in GDP per capita compared to Sweden, and decreased for those countries with large difference. The explanation to these findings is that the international trade has experienced simultaneous development for both Sweden and partner countries and this has generated equalized two-way trade between similar economies, there could also be the possibility of long-term trade contracts that are less sensitive when a crisis occurs. The countries with larger economic difference has been affected in a larger extent which has led to decreased two-way trade, probably caused by a greater gap between countries economic structures and consumer demands.