Explain what the index of intra-industry trade shows

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1. Why does Linder's theory of trade in manufactured products predict that more trade will take place between similar countries? Trade in services is becoming increasingly important to the United States; would you predict that this US trade is more likely to be conducted with similar countries or with dissimilar countries?

2. Explain what the index of intra-industry trade shows, and suggest why the values of this index for Japan and Germany are so different.

Reference no: EM131249021

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