Question

How can there be any economic gains for a country from both importing and exporting the same good, like cars?

Short answer

Gains from splitting up the value chain, high degree of specialization, and economies of scale.

Step-by-step solution

Step 1. Introduction

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

Step 2. Explanation

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. Workers learn unique skills by working on very specific products. Specialization can be finely split and distributed around the world. The countries also gain from economies of scale when the average cost declines with an increase in output.