Trade between Similar Economies

Countries with similar economies are more likely to trade with one another, especially if they are at a similar development level, have political or security partnerships, or have cultural ties. Why might that be? Consider that qustion as you read this section, and then answer the questions at the end of the section.

Review Questions

  1. What is intra-industry trade?
  2. What are the two main sources of economic gains from intra-industry trade?
  3. What is splitting up the value chain?