The evolving pattern of Hungary's agri-food trade is analysed using recently developed empirical procedures based on the classic Balassa index and its symmetric transformation. The extent of trade specialisation exhibits a declining trend; Hungary has lost comparative advantage for a number of product groups over time. The indices of specialisation have also tended to converge. For particular product groups, the indices display a less persistent pattern. They are stable for product groups with comparative disadvantage, but product groups with weak to strong comparative advantage show significant variation. The results reinforce the finding of a general decrease in specialisation, but do not support the idea of self-reinforcing mechanisms, emphasised strongly in much of the endogenous growth and trade literature.
Horizontal and vertical intra-industry trade (IIT) in agri-food products between Hungary and the EU is investigated. Intra-industry trade is separated into horizontal and vertical components on the basis of differences in unit values. Three different approaches to measuring IIT are employed and tested using standard regression models. Results show that horizontal IIT in agri-food products is low, but vertical type trade is more prevalent, though still less important than inter-industry trade. The results lend support to the contention that there are different determinants for horizontal and vertical IIT. More importantly, using a measure of IIT that reflects the level of trade produces better regression results than those based on the degree or share of IIT. The model relating to Hungary’s vertical IIT in agri-food products yields the most promising results in terms of a priori expectations.
This paper investigates trade balances and unit values focusing on Hungarian-Slovenian bilateral agri-food trade flows to distinguish types of one-way and two-way trade flows, categories of price competition and categories of quality competition. We combine Gehlhar — Pick’s (GP) (2002) procedure of four trade categories with knowledge from literature on intra-industry trade (IIT) to disentangle one-way trade, which can be significant when trade between two countries is imbalanced, from two-way matched trade flows with unit values as proxies for price. By comparing the empirical results obtained using the additional categories of one-way trade and disentangled IIT types in two-way matched trade by product was found that GP’s two price and two quality competition categories and IIT types complement each other. The decomposition of GP non-price competition categories on quality competition and one-way trade illustrates that one-way trade is the most significant component of agri-food trade between Hungary and Slovenia, a finding relevant for agri-food trade of several small countries. One-way trade cannot be associated by the simultaneous export and import unit values by the product, but by some other factors of trade specialisation and comparative trade advantages of relevance for public policy makers and private business.