Determinants of Intra-Industry Trade in Final Goods and Intermediate Goods between Turkey and Selected OECD Countries

The increased importance of fragmentation in world trade has created an interest among trade economists to explain the determinants of trade in intermediate goods. A significant portion of trade in intermediates between Turkey and OECD countries takes the form of intra-industry (IIT). Country-specific and industry-specific hypotheses drawn from the IIT literature are put forward to investigate the IIT in final and intermediates between Turkey and other selected OECD countries for the period of 1985-2000. To test these hypotheses, we have utilized three-way fixed effects and random effects models. The results indicate that the determinants of IIT for final goods are not much different from those for intermediate goods. Finally, the results suggest that country-specific rather than industry-specific variables are the central determinants of IIT in final and intermediate goods between Turkey and OECD.