Question

Suppose the amount of exports of textile machinery from Italy to the rest of the world equals 60 billion tons. The amount of imports of textile machinery into Italy from the rest of the world is 40 billion tons. Therefore, the intra-industry trade share for machinery is:_______.a. 0.2.

b. 0.8.
c. 1.5.
d. 0.67.

Answer 1

B. 0.8

Step-by-step explanation:

Given that

Export = 60 billion tons

Import = 40 billion tons

Recall that

Intratrade share = 1 - ( X - M ÷ X + M)

Using Grubel-Lloyd index formula

Therefore

ITS = 1 - ( 60 - 40 ÷ 60 + 40)

= 1 - ( 20 ÷ 100)

= 1 - 0.2

ITS = 0.8