Economics » International Trade » Intra-industry Trade between Similar Economies

Key Concepts and Summary

Key Concepts and Summary

A large share of global trade happens between high-income economies that are quite similar in having well-educated workers and advanced technology. These countries practice intra-industry trade, in which they import and export the same products at the same time, like cars, machinery, and computers.

In the case of intra-industry trade between economies with similar income levels, the gains from trade come from specialized learning in very particular tasks and from economies of scale. Splitting up the value chain means that several stages of producing a good take place in different countries around the world.

Glossary

intra-industry trade

international trade of goods within the same industry

splitting up the value chain

many of the different stages of producing a good happen in different geographic locations

value chain

how a good is produced in stages

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