Carefully Explain How and Why the Share of Intra-Industry Trade

Question

Examlex · Accepted Answer

The Answer is In general,as countries develop,the share of intra-industry trade increases between countries of similar levels of economic development.This is because such countries both produce and exchange differentiated goods.Trade in these goods is based on the development of many varieties of goods rather than on comparative advantage.Case Study 6-5 shows the change in intra-industry trade shares for a variety of countries; in general shares of intra-industry trade have increased for nearly all of the (mostly developed)countries in the study.(Further discussion could include patterns of trade will countries at different levels of development.)

Carefully Explain How and Why the Share of Intra-Industry Trade

Definitions: