Quality of Traded Goods and Intra-Industry Trade

The intra-industry trade (IIT) revolution in trade theory, which is the phenomenon of simultaneous exports and imports of goods within the same industries, led to a different view of the world trade in several respects. Since countries might be supplying goods that are considered as low quality in a country and as high quality in the other country, the quality of goods play an important role in the demand for exported goods of a country. The main objective of this study is to evaluate the position of manufacturing industries of selected emerging economies in the EU market in order to get an information about their quality competition based on IIT. In this respect, six emerging countries are taken as a reporter- Brazil, China, India, Mexico, Russia and Turkey (BCIMRT) and five largest EU countries as partners- France, Germany, Italy, Spain and United Kingdom (EU-5 ). Using bilateral ISIC trade data for 2000-2010 period, this study also examines the export similarities and the differences in the quality of goods exported from BCIMRT to the EU-5 market.