inter-industry trade

Quick Reference

Trade between countries where exports and imports consist of different types of goods. Such trade is based on differences in factor endowments. Countries tend to export goods where they have relatively large amounts of the factors intensively used in producing them, and to import goods which they cannot produce themselves, or which they can only produce at great cost, due to a scarcity of the factors intensively used in producing them. With trade of this type, it is unusual for a country to import and export goods in the same classification. Inter-industry trade is contrasted with intra-industry trade, which is a consequence of imperfect competition, and often takes place between countries with very similar factor endowments.

Subjects: Economics.

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