The concept of intra-industry international exchange of goods and assets has attracted a lot of interests within the last 30 years. Concepts like intra-industry trade, intra-industry foreign direct investments, intra-industry affiliate sale, and intra-industry supply have been used in theoretical and empirical research with most emphasis laid on intra-industry trade. What has not been investigated until now is a subgroup within intra-industry trade, namely intra-industry affiliate trade which is two-way trade from foreign owned affiliates in a country. By use of a unique database containing trade (exports and imports) and industry variables (wages, employment, foreign capital share, investments, sales, etc.) of foreign owned companies in the Polish manufacturing industry for the years 1993-2002, this paper, investigates for the first time intra-industry affiliate trade (IIAT), including its industry determinants. Labour intensive industries and specialised supplier intensive industries are shown to operate at the highest level of IIAT, and generally IIAT is shown to be increasing over time. The wage level, the labour intensity and scale economies are in panel estimations shown to be significant and positively associated to IIAT, while the degree of foreign control over affiliates (measured by the foreign capital share in total equity) is insignificant. Our results are shown partly to be in accordance with the knowledge capital model of Markusen (2002). By assuming that industry variables like scale economies and wage levels are proxies for technology flows and IIAT is a measure for its efficient transfer, our results do also show (in accordance with international business research (Kogut and Zander, 1993)) that complex technology is transferred to larger affiliates, giving higher wages to their employees as an incentive to absorb technology .
Proceedings of Etsg 2004 Nottingham (findes På Www.etsg.org/, 2004