Page 98 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

International Trade and Finance

Notes • As well, economic theorizing has improved, such that there is now a better understanding of
industrial structure and the nature of oligopolistic markets. Herein lies the relevance of 'new
view' for small open economies.
• Firms in these countries produce, nowadays, new high technology products of services for the
export market, manufactures on a large scale by using high technology processes. This has got
a strong empirical basis. Considerable dynamic benefits of the learning-by-doing type or
'technological invitation' variety may be expected to evolve through different ex ante policies
and also through the adoption of development strategies.
• Although empirical work incorporating more recent theoretical approaches is not lagging behind,
the present analysis shows an evolution of new trade patterns for the developing economies
participating and integrating themselves with the world.
7.9 Key-Words

1. Intra-industry trade : Intra-industry trade refers to the exchange of similar products belonging
to the same industry. The term is usually applied to international trade,
where the same types of goods or services are both imported and exported.
2. International trade : It is the exchange of capital, goods, and services across international borders
or territories. In most countries, such trade represents a significant share
of gross domestic product (GDP). While international trade has been
present throughout much of history, social, and political importance has
been on the rise in recent centuries.
7.10. Review Questions

1. What are the causes of emergence of intra industry trade?
2. Discuss the measurement of intra industry trade and its impact on developing economics.
Answers: Self-Assessment
1. (i)(d) (ii)(b) (iii)(a) (iv)(c) (v)(a)
7.11 Further Readings

1. Altonji, Joseph, and David Card. 1991. "The Effects of Immigration on the Labor
Market Outcomes of Less-Skilled Natives." In John Abowd and Richard Freeman,
eds, Immigration, Trade, and the Labor Market, (Chicago, IL: University of
Chicago Press), 201-234.
2. Bernard, Andrew B. and J. Bradford Jensen. 1999. "Understanding Increasing
and Decreasing Wage Inequality." In Robert C. Feenstra, ed., The Impact of
International Trade on Wages, Chicago: University of Chicago Press.
3. Bernstein, Jeffrey R. and David E. Weinstein. 1998. "Do Endowments Predict the
Location of Production? Evidence from National and International Data." NBER
Working Paper No. 6815.
4. Blackorby, Charles, William Schworm, and Anthony Venables. 1993. "Necessary
and Sufficient Conditions for Factor Price-Equalization." Review of Economic
Studies 60: 413-434.

92 LOVELY PROFESSIONAL UNIVERSITY