We present three hypotheses that link intra-industry trade to 3 Findlay and O’Rourke, Power and Plenty, p. 426. These countries will trade these goods with each other. 171 Chapter 9 INTER-INDUSTRY AND INTRA-INDUSTRY SPECIALIZATION IN MANUFACTURED GOODS 9.1 Introduction chapters of this volume examined the determinants of interThe Earlier industry (Chapter 3) and intra-industry (Chapter 8) trade in manufactured goods in the framework of multi-country and multi-industry models. c. Intra-industry trade is said to occur when the United States exports Ford automobiles and imports Honda automobiles. between intra-industry and inter-industry trade and its theoretical relationship to development and conflict. Some writers have still made attempts to explain the intra-industry trade based on factor endowments by establishing link between the product specifications and the different combinations of the basic factors like labour and capital. 4 As Findlay and O’Rourke explain, industrializing states in … Question Question One: According to the text and theory inter-industry trade reflects comparative advantage while intra-industry trade reflects scale economies and demand for product variation Explain the difference between inter-industry and intra-industry trade. What does intra mean? While inter-deals with open systems among groups, intra-deals with closed systems between a single group. The model suggests that the trade occurs between countries because of the differences in labor productivity that occurs because of technological differences. ... will rise in price and the goods that a country imports will fall in price. World Economy Intra-industry trade Intra-industry trade arises if a country simultaneously imports and exports similar types of goods or services. (4 Marks) Explain why countries that are similar in … Contrast this with inter-and you immediately see the difference. Inter- vs Intra-” “Inter-” and “intra-” are two prefixes which are commonly used in the English language. Suppose, for the sake of argument, that we focus on the sector “cars”. Intra-industry trade is exchange of similar good in the same industry. The theory of comparative advantage suggests that trade should happen between economies with large differences in opportunity costs of production. b. Intra-industry trade is usually discouraged by the government. Similarity is identified here by the goods or services being classified in the same “sector”. These two prefixes cannot be used in place of one another. The original H-O theory of international trade is not capable of explaining the intra-industry trade. intra-industry trade, however, has proven elusive. The main difference between Inter-Industry trade and Intra-Industry trade is that Inter-Industry trade is based on conventional comparative advantage theories (Ando 2006). a. Intra-industry trade is mostly based on the differences stressed in the Heckscher-Ohlin trade theory. Please Help Me Prove: Inter-industry trade and intra-industry trade differ in terms of the basis of trade, the pattern of specialization and the direction of trade and the implications for policy. They sound similar, but when used with other words form words which are very different from each other. Most trade between developed and developing countries is inter-industry trade, while an increasing trade among developed countries is intra-industry trade. Explain the difference between inter-industry and intra-industry trade. 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