Intra-Industry Trade in Agri-Food Products: The Case of Poland and Ukraine
Purpose: The aim of the article is to compare the changes in the intensity of intra-industry trade (IIT) in agri-food trade of Poland and Ukraine, as well as changes in the structure of this trade from 2003 to 2023. Poland’s membership in the European Union resulted in a dynamic increase in agri-food trade. This increase was accompanied by a growing significance of intra-industry trade, defined as the simultaneous export and import of products from the same industry. One of the factors supporting the increase in the intensity of intra-industry trade between the two countries is their participation in the process of economic integration. Since 2014, also Ukraine has been integrating with the European Single Market. Design/Methodology/Approach: The intensity of IIT was measured using a simple Grubel-Lloyd index, and the division of trade into horizontal and vertical product differentiation was based on the unit value ratio in exports and imports. Findings: The study found that during Poland’s membership in the EU, the importance of intra-industry trade in agri-food products significantly increased, mainly due to the intensification of IIT in trade with EU countries. In contrast, intra-industry trade in Ukraine's agri-food sector had little significance. Despite Ukraine's ongoing integration with the European Single Market, IIT indicators in trade with EU countries remained very low. This was due to the underdeveloped food industry, whose products, as differentiated products, are mainly subject to intra-industry trade. Trade in basic agricultural products typically has an inter-industry character. Practical implications: Increasing the intensity of intra-industry trade in agri-food products in Ukraine would allow both producers and consumers to benefit more from trade than in case of inter-industry specialization. Originality/Value: The study allowed for a comparison of the intensity of intra-industry trade in agri-food products of Poland and Ukraine, thus filling a research gap in this area.