Question

What is intra-industry trade?

Short answer

Trade of similar products between international boundaries

Step-by-step solution

Step 1. Introduction 

International trade can be defined as the exchange of goods, services and resources across international borders.

Step 2. Explanation

Intra-industry refers to the trade of similar products across international borders. A significant portion of international trade is composed of trade between advanced high-income countries. who trade similar products.

Generally, it is assumed that countries specialize in one product and export it to another country and import products they do not specialize in. But when countries export and import the same types of products they gain from a higher degree of specialization, economies of scale, and splitting of the value chain.