RUSSIA’S INTRA-INDUSTRY TRADE IN AGRICULTURAL PRODUCTS: THE EXTENT AND MAJOR TRENDS

This paper studies specialization of Russia’s foreign trade in agricultural products and foodstuffs in terms of inter-industry and intra-industry trade. The objective of this study is to consider the extent of intra-industry trade in Russia’s foreign trade in agricultural products and to identify significant changes in trade patterns at the industry level over the transition period. Thereby, in this paper we provide a systematic decomposition of Russia’s foreign trade into three trade types: inter-industry, intra-industry in horizontally and vertically differentiated products, over the period 1996–2012. The analysis is performed in relation to the whole world, individual regions and in relation to selected countries (Ukraine, USA, Brazil, Egypt, China, Germany and Hungary). The analysis is performed using the traditional methodology provided by Grubel-Lloyd indices, proposed by Fontagne and Freudenberg methodology (1997) as well as the method of Greenaway et al. (1995). Results show that the extent of Russia's intra-industry trade varies significantly depending on the geographical region. The lowest level of intra-industry trade is observed in relation to Egypt and Brazil, the highest - in relation to Ukraine. Intra-industry trade growth simultaneously with the process of trade liberalization was not observed. Therefore, the empirical results support recent trade theory, which predicts an increasing level of intra-industry trade with between neighboring countries with a similar level of economic development.