DETECTING VERTICAL INTRA-INDUSTRY TRADE IN CULTURAL PRODUCTS

The European integration process has always since markedly characterized by the increasing incidence of Intra-Industry Trade. This has been theoretically justified on the grounds of the new approaches emerging in international trade literature, based on imperfect competition and differentiated products. In recent years another distinctive economic feature of European Union is the importance gained by the so called 'cultural and creative sectors', which are often studied and monitored by reports for their great growth potential. We provide here a systematic decomposition of world trade in 'cultural/creative goods' for the year 2009 (using harmonised bilateral flows for some 213 products defined as 'cultural products' by UNESCO, 2009) into three trade types: inter-industry, intra-industry (IIT) in horizontally versus vertically differentiated products. We show that the world trade in cultural goods is significantly characterised by two-way trade of vertically differentiated products. Moreover we specifically focus on the Italian peculiarities in the 'cultural trade': therefore we first work out which ones of the world countries are the 'top exporters' of these categories of products and then we compute an indicator of the Italian goods'(tm) quality relative to each of these competitors. Not surprisingly, we find that the most important bilateral IIT intensities in cultural products are observed in Europe. However the presence of developing countries is not unimportant. This can be explained partly to as a consequence of the increasing level of trade integration among some Asian countries and as a consequence of an increasing despecialization of firstly industrialized countries in the production and trading of these products. Finally, with reference to the relative quality of Italian cultural products compared with that of the other top-exporters in these sectors, we find that Italian performance are good relative to those of emerging countries (such as China and India), but not as much if compared to other European countries (such as Germany, France and United Kingdom).