The asymmetric effect of endowments on Vertical Intra-Industry Trade

This paper investigates the determinants of Spanish vertical intra-industry trade with a large sample of countries. We empirically test the comparative advantage explanation. To this aim, we build physical, human and technological capital stocks. On average, that is using OLS techniques, differences in endowments are a limitation for vertical intra-industry trade. Using quantile regressions techniques (QR), we observe that this negative effect decreases in absolute terms as vertical intra-industry trade flows increase and become positive, in some cases, for the upper tails, supporting the view of a reduced version of the comparative advantage explanation. JEL Classification Numbers: F11, F12, F14, C23, C24.