Intra-industry trade arises if a country simultaneously imports and exports similar types of goods or services. Similarity is identified here by the goods or services being classified in the same “sector”. Suppose, for the sake of argument, that we focus on the sector “cars”. Intra-industry trade then occurs, for example, if Germany exports cars to France and simultaneously imports cars from Italy. On the one hand this raises the question why Germany is (at least partially) exporting cars in exchange for importing cars instead of focusing exclusively on so-called inter-industry trade, namely exporting cars in exchange for importing different types of goods (such as food or airplanes). On the other hand, this raises the question why different goods are lumped together in the same sector, as the exported Volkswagen Golfs differ from the imported Ferraris. We address these two basic questions below.
|F0, international trade policy, intra-industry trade|
|Princeton University Press, Princeton NJ|
|Organisation||Erasmus School of Economics|
van Marrewijk, J.G.M. (2008). Intra-industry trade. Princeton University Press, Princeton NJ. Retrieved from http://hdl.handle.net/1765/12977