Intra and Extra-EU Intra-Industry Trade in Greece: Trends, Determinants, and Structural Adjustment.

This paper examines the effects of the European integration process on Greece's intra-EU vis-à-vis extra-EU intra-industry trade (IIT) patterns over the 1981-2002 period and assesses the associated trade-induced structural adjustment costs. Furthermore, the trade developments between Greece and the Central and Eastern European Countries (CEECs) during the last decade are also examined. Our results indicate that intra-EU and extra-EU IIT in Greece exhibit diverging trends. IIT outside the EU is higher and displays a significant upward trend, whereas the extent of intra-EU IIT of Greece is generally lower and shows a decreasing trend. Comparative advantage considerations seem to determine Greece's intra-EU and extra-EU IIT. Greece's IIT with the CEECs is particularly low and to some extent declining. Our analysis suggests increasing inter-industry specialization and trade-induced adjustment costs for Greece's trade with the EU-15 and the new members. [ABSTRACT FROM AUTHOR]