Impact Of Trade On Intra Trade Industry

1357 WordsNov 24, 20156 Pages
In the globalization era nowadays, trading has become an important activity across all regions. Trading is known as an exchange of good and services from country to another country. Commonly, trading is necessary due to the limited resources are scattered unfairly between other regions and some countries are better producing products than other (Lipsey R., 1960). However, trading not solely occur to the scarce resources but also happens to other country that can specialize in similar goods and services. For instance, Malaysia and Thailand are better in producing rice but yet they do trading of rice with one another. This trade action is known as intra-industry trade. (Krugman P.,1991) stated that intra-industry trade is a two-way trade in similar goods or in other words known as an exchange of similar goods between countries in same industry. It is important for intra-industry trade to grow in the current emerging market since there trading has become beneficial activity. Intra-trade industry consists of homogeneous products and heterogeneous products. It is vital to acknowledge why economists have turned their attention to intra-industry trade. Standard trade theory was introduced and founded by David Ricardo in the period of 1817 when he formulated what we now call the theory of comparative advantage. Comparative advantage deals with all sorts of goods and services that are caused by the differences among countries. Ricardo highlighted the key ingredient of the theory of

More about Impact Of Trade On Intra Trade Industry

Open Document