Suppose the amount of exports of textile machinery from Italy to the rest of the world equals 60 billion tons. The amount of imp
orts 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) 0.2b) 0.8c) 1.5d) 0.67
We have been given that 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.
To find the intra-industry trade share for machinery, we will use following formula:
, where,
X = Exports,
M = Imports,
i = Industry
Substitute the given values:
Therefore, the intra-industry trade share for machinery is 0.8 and option 'b' is the correct choice.