On the basis of OECD trade statistics at SITC 5 digit level for the period 1961-1999 this paper shows the classification of international trade in (1) inter-industry trade; (2) horizontal intra-industry; and (3) vertical intra-industry trade used in the empirical trade literature to be unstable stable at the individual product level. This indicates that this type of statistical classification based on unit-values is probably not very useful. On the other hand, the paper also shows in accordance with the literature, that the aggregate distribution of trade into the three categories apparently is rather stable with vertical intra-industry trade (between Germany and France) making up 50-60%. The high level of vertical intra-industry trade probably covers up many products shifting between e.g. vertical and horizontal intra-industry. The statement from the literature that the European integration process involves heavy adjustment costs because of the size of vertical intra-industry trade is therefore rather dubious.
Global Business and Finance Review, 2002, Vol 7, Issue 1, p. 1-12