HI5016: International Trade Assignment Sample
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International Trade and Enterprise Assignment (HI5016)
Added on 2020-05-16
HI5016: International Trade Assignment Sample
International Trade and Enterprise Assignment (HI5016)
Added on 2020-05-16
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1INTERNATIONAL TRADEInternational tradeName of the studentName of the UniversityAuthor note
2INTERNATIONAL TRADETable of ContentsIntroduction:...............................................................................................................................3Heckscher-Ohlin Model and Intra-Industry Trade:....................................................................4Inter Industry Trade and Intra Industry Trade Structure:.........................................................10Conclusion:..............................................................................................................................12References:...............................................................................................................................14
3INTERNATIONAL TRADEIntroduction:Globalisation encourage countries to trade with different nation and boundaries, asinternational trade is one of the foremost element in macro economics which enablescountries to achieve optimum level of economic growth. At present, several forces makesglobalisation more complex with billion of daily transaction which takes place every passingyear, at the same time these forces comes into account of economic, legal political,technological and even cultural in our everyday lives. Another pivotal aspect of globalisationin economics is opening of cross-borders and free trade which stimulates the stability andgrowth of countries. The word “inter-trade” and “intra-trade” basically similar words but theyhave different meanings. In international economics the word inter-trade industry refers to thecountry trade which is carried out in different industries it is typically know as one-way tradein sector. On the other hand, in intra-trade industry trade takes place within industries, inother words country export and import goods in same industry it is also called two-way tradewhich means country is importing and exporting same or similar goods. Generally, intra-tradeindustry is more productive in technological success than inter-trade industry. Countries withdiverse economy and capital tend to engage more in intra-industry trade. It is calculated byGrubel-Llyod (GL) index:Where,X is export of a countryM is import of a countryi is industry.For instance, if a country is only importing and exporting goods X i.e. Rice then GLindex for that specific sector will be Zero “0”. On the contrary, if a country import and
4INTERNATIONAL TRADEexports same amount of goods X then it is likely to have 100 of GL index of that particularsector. To illustrate, Korea is another example of intra-trade as it exports and imports cars inparticular level. Intra-trade provides wide range of benefits by offering trade and engagingcountries through businesses. [ CITATION tut16 \l 3081 ]Countries having strong economy and rapidly industrialized markets opt to choose intra-industry trade because they have capabilities to produce easily different variates of products.However, developing countries or rich resource nations have slightly less intra-industry trade.There are enormous benefits of intra-industry trade as compare to inter-industry trade. Let’sdiscuss some of them in detail. Firstly, it enables to accelerate the diversity of products withinthe same industry which is benefited by both i.e. businesses and consumer. At present, intra-industry result is seen everywhere in markets, as the huge product range is easilydifferentiated from the same industry moreover, it provide opportunities of having a broadrange of differentiated commodities of trading partners in market. Another intra-tradeindustry benefit include the opportunities for business byusing comparative advantagefollowed by, it also benefited to economies of scale. To elaborate, countries havingcomparative advantage can earn more economic growth if they entirely focus on producingparticular goods within their limit rather than engaging themselves for the production ofcomplete range of particular products. Lastly, it brings innovation in industries by helpingeconomies to cope-up in short-term fluctuation in the country. [ CITATION Joh12 \l 3081 ]Heckscher-Ohlin Model and Intra-Industry Trade:This model is developed by two renowned Swedish economists namely “EliHeckscher and Bertil Ohlin”. This model has a great impact on problems of internationaltrade and on general equilibrium level. According to this model countries should export thoseproducts which are in huge quantities, at the same time countries import those specificproducts for production which are inadequate in particular country. Trade takes place among
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