Linder Revisited: Trade and Development in the Spanish Economy

Fillat Castejon, Carmen (Universidad de Zaragoza) ; Serrano Sanz, José M. (Universidad de Zaragoza)

Resumen: The literature has tended to treat Linder’s hypothesis with excessive simplicity given the absence of any formalization for this intuitive theory on trade potential in manufacturers, closely related to the intra-industry trade paradigm. Against this background, in this paper we first propose a complete empirical model of bilateral trade containing all the determinants suggested by Linder, with special emphasis being placed on
non-homothetic preferences, national income distribution, international economic convergence and geographic distance. We then test the model in an appropriate case, namely that of Spain during the period of its economic transition running from approximately 1959 to 1986. This period was characterized by increasing openness and structural change, as well as by convergence until that country’s integration into the then European Economic
Community. The results confirm the importance of the characteristics of internal demand, essentially of income distribution and non-homothetic preferences. We find that trade horizons delimited by bilateral proximity in development and geographical distance, together with multilateral convergence in economic development are the main indicators for selecting trade partners as markets and suppliers, thereby reinforcing the idea that foreign markets can be considered as an extension of the national market.

Idioma: Inglés

DOI: 10.1080/0269217042000227097

Año: 2004

Publicado en: International review of applied economics 18, 3 (2004), 323-348
ISSN: 0269-2171

Tipo y forma: Artículo (PostPrint)

Área (Departamento): Área Economía Aplicada (Dpto. Estruc.Hª Econ.y Eco.Pb.)