Intra Industry Trade
In the era of fifties sixties and seventies trade among the advanced countries grew at a fastest rate and it was in similar but differential manufacturing products.
Intra-industry made implies overlapping trade in a particular commodity. The extents of intra- industry trade Amy be measured thus
IIT1 = 100 [(X1 + M1) – (X – M1)/(X1 + M1)]
where, IIT1 = intra- industry trade in commodity
X1 = value of exports of commodity j
M1 = value of imports of commodity j
For example, exports of cars equal $15 million and imports of cars $10 million in a country, then intra industry trade in this case is:
IIT1 = 100 [(15 + 10) – (15 – 10) / (15 + 10)]
= 100 [(25-5)/25] = 100 (21/2)
= 80%
This index can be used for comparing across countries of the digress of intra industry trade.
IIT represents a growing share of total trade, especially among the high – income industrialized nations.
Malaysia IIT index: 32%
Thailand: 17%
Pakistan: 15%
India: 37%
Canada : 67%
U.K: 81 %
Average: LDC: 15%; NIC: 42%
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