Both the empirical and the theoretical literature on intraindustry trade (IIT) has developed rapidly during the last fifteen years. IIT occurs when countries simultaneously export and import goods produced by the same industries. This phenomenon is not envisaged by the standard comparative advantage theory of international trade and requires explanations based upon factors such as scale economies, product differentiation, imperfect markets and consumers' taste for variety, which are not considered in the world of perfect competition of the standard theory. The existence of IIT thus stimulated the development of new trade theories in competition with that based on comparative advantage. Assessing their importance relative to the standard theory in explaining patterns of trade in the real world is essentially an empirical matter. There are, however, two unresolved problems which seriously undermine the empirical results on this subject. The first is the very existence of IIT and concerns the definition of "industry" and the level of data disaggregation at which the phenomenon is best observed. The second problem stems mainly from the objective difficulty of finding a suitable quantitative measure of IIT. This is at least partly linked with the first problem, but it can be treated separately for the sake of simplicity.
This paper addresses the second of these two problems and is organized as follows: section two is devoted to the examination of Grubel and Lloyd's indices, those most used in empirical studies of IIT up to now. Section three reviews the measure proposed by Aquino and presents some criticisms. Section four is devoted to a discussion of the view that measures of IIT should be corrected for the overall trade imbalance. Section five shows why Grubel and Lloyd's uncorrected index seems to be the best of those available at present. In section six a new measure is presented together with some preliminary calculations. Finally, section seven sums up the main conclusions reached in the article.
Stefano Vona died on 27 November of this year, after a long illness that sapped his physical but not his intellectual strength. The works that he published during the year are testimony of this, as is this article, which he submitted to the editorial committee just a few days before his death. He did not have time to make a final revision, but, apart from a few formal changes, we have decided to publish it as he gave it to us. The editorial committee, of which Stefano Vona was a member from 1987 to the beginning of this year, wishes to take this opportunity to commemorate an economist of considerable insight and a colleague who possessed rare professional and human qualities.
