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A Inter Industry and Intra Industry Trade The HackescherOhlin Model

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On the other hand, the intra industry trade refers to the exchange of the products of the same kind of products and services between different countries. The intra industry trade could occur between the countries that have similar relative amount of factor of production whereas the inter industry trade occurs between the countries that have different production factors. Intra industry trade results in the economies of scale and allows lower cost of production while providing the customers wide range of choices. It is not focused on gaining competitive advantage. The standard industrial classifications have provided the estimated that around 25 percent of the volume of world trade has been contributed by the intra industry trade. The inter industry trade is the trade between the countries where the export and import of different types of goods and services occur between the countries. The inter industry trade us based upon the differences on the production factors held by the industries of different countries. The countries export the products that they could produce in relative large amount due to intensive capital whereas they import the products that they could not produce themselves due to lack of intensive capital and production factors required for the production of these products. The inter industry trade does not include the exchange of goods between the countries in the same classification. The intra industry trade refers to the trade of the goods and services of the same classification between the countries…. The inter industry trade us based upon the differences on the production factors held by the industries of different countries. The countries export the products that they could produce in relative large amount due to intensive capital whereas they import the products that they could not produce themselves due to lack of intensive capital and production factors required for the production of these products. The inter industry trade does not include the exchange of goods between the countries in the same classification (Bela, 1981, p1109). The intra industry trade on the other hand refers to the trade of the goods and services of the same classification between the countries. The products of same classification are exported and imported by the countries in the process of intra industry trade. The notion of intra industry trade is based upon the economies of scale and similarity of the production factor endowment. The intra industry trade is lead by different factors for instance, the countries use to important a product in some season and then export the same product in another season during which they could product it abundantly. Similarly, some countries export a product from one border and at the same time it import the same product at another border due to the cost involved in the transportation of these products within the country from one end to another (Aquino, 2000, p275). The intra industry trade focuses upon the economies of the scale because it proposes the import of the goods from the other countries they could be manufactured at home but their production cost would be greater at home and from other countries the same products could be attained at comparatively lower rates. The world community is witnessing growing