(week 6) Intra industry trade

Question 1

index of intra-industry trade

Answer 1

Question 2

Types of intra industry trade

Answer 2

-Horizontal Intra-Industry trade
- Vertical Intra-Industry Trade
- Inter-Industry Trade

Question 3

orizontal Intra-Industry trade

Answer 3

• Both imports and exports in a given sector at the same stage of processing
• Source is product differentiation

Question 4

Vertical Intra-Industry Trade

Answer 4

• Both imports and exports in a given sector at DIFFERENT stages of processing
• Source: is Fragmentation (comparative advantage in some instances

Question 5

Inter-Industry Trade

Answer 5

• Either import or export of a good in a given sector
• The source is comparative advantage

Question 6

definition of gravity equatoin

Answer 6

bilateral trade between two countries is proportional to size, measured by GDP, and inversely proportional to the geographic
distance between them

Question 7

Gravity equation

Answer 7

Question 8

Border Effect

Answer 8

• The border effect is the reduced trade between countries or regions compared to trade within the same country

Question 9

causes of border effect

Answer 9

• Tariffs: Taxes on imported goods.
• Quotas: Limits on items crossing borders.
• Red tape: Customs processing delays.
• Geographic factors: Border proximity.
• Cultural factors: Shared language or culture.