Economics Module: IIT Indices and UK Trade Policy Implications

This report examines the implications of IIT indices on UK trade policy, focusing on the calculations and their significance. It begins with an introduction to the IIT index, defining it as a measure of overlap between imports and exports of similar commodities. The main body delves into the implications of these calculations for the UK, highlighting the enhancement of trade gains through economies of scale and the three types of intra-industry trade. The Grubel and Lloyd index is also mentioned. The report concludes that the IIT index is crucial for assessing trade, imports, and exports, which is vital for making informed decisions about UK trade policy. The report also references relevant academic sources to support its analysis.

IIT indices and their
potential

Contents
INTRODUCTION.....................................................................................................................................3
MAIN BODY.............................................................................................................................................3
Implications of IIT index calculations for the UK trade policy................................................................3
CONCLUSION..........................................................................................................................................4
REFERENCES..........................................................................................................................................5

INTRODUCTION
IIT index can be defined as an index that measures the overall degree of overlap between
the imports as well as exports of commodities that fall under the same category. A value of 1
indicates pure intra-industry trade whereas a value of 0 indicates pure inter-industry trade. The
podcast explains the implications of IIT index calculations for the UK trade policy.
MAIN BODY
Implications of IIT index calculations for the UK trade policy
For the calculations of the IIT index, total imports and total exports data for a specific
year is collected. This is because it helps in calculating the IIT indices for the UK trade with two
other countries, such as China and USA (Gujre, Rangan and Mitra, 2021). The calculations are
then presented in the form of a table. The IIT index is important because it produces economic
gains between similar countries. not only this, it also allows the workers as well as the
organization to learn and innovate on particular products. In context of the UK trade policy, the
implications of the IIT index include an enhancement in gains from trade through better
exploitation of the economies of scale instead through comparative advantages. Therefore, it can
be said that the practical implication is that high IIT indices, that are typical for highly developed
countries, translate into higher trade benefits for highly developed countries and lower
adjustments. There are three types of intra-industry trades, namely, trade in homogenous goods,
trade in horizontally differentiated goods and lastly, trade in vertically differentiated goods.
The length of intra-enterprise change is measured via using Grubel and Lloyd's index,
i.E., the proportion of intra-enterprise exchange in total alternate (IIT). Intra-industry trade refers
to the exchange of similar products belonging to the identical industry. The time period is
generally implemented to worldwide alternate, in which the identical sorts of items or services
are both imported and exported (Javadinejad, Ostad-Ali-Askari and Eslamian, 2019). Therefore,
it can be said that these are some of the implications of the IIT indices calculations on the trade
policies of the United Kingdom.
There are a number of viable blessings of intra-enterprise exchange. Both countries can
take benefit of excessive specialization and getting to know in positive kinds of automobiles with
positive tendencies, like gasoline-green automobiles, luxurious automobiles, game-application

automobiles, better- and lower-best cars, and so on. Intra-industry exchange represents
international trade within industries as opposed to between industries (Khullar, Bhalla and Tyagi,
2018). Such alternate is greater beneficial than inter-industry trade as it stimulates innovation and
exploits economies of scale. Intra-enterprise change happens while a country exports and imports
items within the equal enterprise. Therefore, it can be said that these are some of the implications
that can be made for the United Kingdom as well as its trade policies.
CONCLUSION
It can be concluded that IIT index is an important aspect that helps in calculating the total
imports as well as exports for a specific year. This also helps in making important decisions for
the UK trade policy.

REFERENCES
Books & Journals
Gujre, N., Rangan, L. and Mitra, S., 2021. Occurrence, geochemical fraction, ecological and
health risk assessment of cadmium, copper and nickel in soils contaminated with
municipal solid wastes. Chemosphere, 271, p.129573.
Javadinejad, S., Ostad-Ali-Askari, K. and Eslamian, S., 2019. Application of multi-index
decision analysis to management scenarios considering climate change prediction in the
Zayandeh Rud River Basin. Water Conservation Science and Engineering, 4(1), pp.53-
70.
Khullar, V., Bhalla, V. and Tyagi, H., 2018. Potential heat transfer fluids (nanofluids) for direct
volumetric absorption-based solar thermal systems. Journal of Thermal Science and
Engineering Applications, 10(1).