Country-specific determinants of vertical and horizontal intra-industry trade of South Africa: An empirical investigation

The main purpose of this study is to investigate the country-specific determinants of horizontal and vertical intra-industry trade (IIT) in South Africa using the gravity model of trade in a panel data setting. It empirically tests new and existing country-specific hypotheses of intra-industry trade. To ensure the sensitivity and robustness of the results, three different econometric approaches have been used in estimating the gravity models of intra-industry trade: the consistent coefficient approach, the fixed effects approach, and the between effects approach. The econometric results are satisfactory in terms of economic interpretation and statistical significance. They are, in most cases, pertinent in determining the country pattern of South Africa's IIT and offer a new empirical validation to the theoretical explanatory variables.