Evolution of intra-industry trade in French trade (1847--1939): A study of the bilateral trade of France with respect to Great Britain, Belgium, Germany, Spain, Portugal, the United States and Canada

This study analyzes the evolution of the bilateral intra-industry trade between France and seven heterogeneous economies of Western Europe and North America (Great Britain, Belgium, Germany, Spain, Portugal, the US, and Canada) for the period 1847–1939. Based in such calculations it is concluded that two-way trade was a common and increasing phenomenon in the pre-WWII era (especially after 1860). In addition, a theoretical model that accounts for the role of income growth and tariff reduction in double trade during this period is developed and tested. Two-way trade was larger in countries with more similar factor endowments, large fraction of trade to GDP, and large proportion of manufacturing exports to total exports. This is the case of the industrial economies of Western Europe (France, Great Britain, Belgium, and Germany). On the other hand, trade was more specialized in low industrial countries (such as Spain and Portugal) given that they usually exchanged agricultural commodities for manufactured goods. Finally, land abundant countries such as the US and Canada had lower amounts of two-way trade than their industrial European counterparts. The US and Canada's levels find their explanation in two facts: their fractions of total trade to GDP were relatively low and they had a comparative advantage in the production and export of land intensive agricultural goods. As a result, their fractions of manufacturing exports to total exports was relatively lower than those of countries at similar stages of development which were not land abundant (such as Belgium, France and Great Britain).