Marginal Intra-Industry Trade, a concept originating in

international economics International economics is concerned with the effects upon economic activity from international differences in productive resources and consumer preferences and the international institutions that affect them. It seeks to explain the patterns and ...

, refers to the degree to which the change in a country's

exports An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an ...

over a certain period of time are essentially of the same products as its change in

imports An import is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. In international trade, the importation and exportation of goods are limited ...

over the same period. The concept is therefore closely related to that of

intra-industry trade Intra-industry trade refers to the exchange of similar products belonging to the same industry. The term is usually applied to international trade, where the same types of goods or services are both imported and exported. Examples Examples of this ...

, that being the export and import of the same items, but concerns changes in exports and imports between two points in time as opposed to their values at a given point in time. The concept is thought to be useful for ascertaining the amount of adjustment costs associated with changing

trade flows Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct excha ...

or the degree to which changes in trade might be responsible for changes in the

distribution of income In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes eco ...

. Several formulas have been proposed to quantify this concept but the most widely used is that of Shelburne (1993). MIIT=1-(, ΔX-ΔM, /(, ΔX, + , ΔM, )) where ΔX represents the change in exports between two points in time and ΔM represents the change in imports over the same period of time. The absolute values are needed because these changes in trade flows can sometimes be negative. Thus when exports and imports of a good change by the same amount the index would be one while if exports increase while imports do not (or vice versa) then the index would be zero. Generally adjustment costs or distribution effects are thought to be small if the MIIT index is high. The choice of the time period to use in making this calculation is somewhat arbitrary but can nevertheless significantly affect the results. The index is usually calculated as a sum of the different changes in imports and exports in the different sub-sectors (i). Thus more formally the index is: MIIT=1-Σ_i(, ΔX_i-ΔM_i, )/(, ΔX_i, + , ΔM, _i) Brülhart (1994) has further analyzed the properties of this index and popularized its use.Marius Brülhart, Marginal Intra-Industry Trade: Measurement and Relevance for the Pattern of Industrial Adjustment, ''Weltwirtschaftliches Archiv'', Heft 3, 1994, p.600-613.

References

International trade theory {{industry-stub