19.3 Intra-industry Trade between Similar Economies

LEARNING OBJECTIVES

By the end of this section, you will be able to:

•

Identify at least two advantages of intra-industry trading

• Explain the relationship between economies of scale and intra-industry trade

Absolute and comparative advantages explain a great deal about global trading patterns. For example, they

help to explain the patterns that we noted at the start of this chapter, like why you may be eating fresh fruit

from Chile or Mexico, or why lower productivity regions like Africa and Latin America are able to sell a

substantial proportion of their exports to higher productivity regions like the European Union and North

America. Comparative advantage, however, at least at first glance, does not seem especially well-suited to

explain other common patterns of international trade.

The Prevalence of Intra-Industry Trade between Similar Economies
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