Briefly discuss what models are more appropriate at explaining trade in the sectors that you have identified as having low levels of intra-industry trade. What about trade-in those sectors that you have identified as having high levels of intra-industry trade?
1. Intra - industry trade is a kind of trade where the same kind of products belonging to the same line of industries are exchanged. This usually happens with international trade where the products are imported and exported.
2. This generally occur in the industries of Computers, Automobiles, Food, etc.
3. Traditional models were explained by David Ricardo's model and Heckscher-Ohlin model. These theories use the aspect of comparative advantage to explain why the countries within the same industry trade.
4. Basically other economists said that they(models mentioned above) tried to get rid of the thought that the products are produced under the similar technological aspects.
5. Donald Davis who developed the Heckscher-Ohlin-Ricardo model explained that the intra-industry trade especially between countries happens, in order to reap the benefits of exchanged technology and also specialization in the product traded.
6. Many economists feel that it's very difficult to measure intra-industry trade statistically due to various kinds of qualitative aspects and also kinds of classification on the product's specialization.
Briefly discuss what models are more appropriate at explaining trade in the sectors that you have...