Country‐Specific Determinants of Horizontal and Vertical Intra‐industry Agri‐food Trade: The Case of the EU New Member States

Intra‐industry trade ( IIT ) has become a widespread phenomenon with a growing role in international trade, though agricultural trade is usually neglected in empirical works. This article identifies the determinants of horizontal and vertical intra‐industry agri‐food trade between New Member States ( NMS ) and the EU ‐27 in 1999–2010, by applying static and dynamic models with different specifications to panel data. Results show that IIT is mainly of a vertical nature in the NMS , though the majority of NMS export low quality agri‐food products to EU ‐27 markets. Factor endowments are negatively related to agri‐food horizontal intra‐industry trade ( HIIT ), but positively to vertical intra‐industry trade ( VIIT ). Economic size is positively and significantly related to both types of IIT , while distance and IIT are found to be negatively related in both cases. Results also suggest that HIIT and VIIT are greater if a New Member State exports agri‐food products to another NMS while EU accession has had positive and significant impacts on both HIIT and VIIT , suggesting that economic integration fosters IIT .