The process of exporting and importing goods in the same industry is called intra-industry trade. Most of the trade in industrialized countries is carried out as intra-industry trade. The process of measuring the intra-industry trade index of certain products was first presented in 1971 by Herb Grubel and Peter Lloyd.
Intra-Industry Trade (IIT)
Towards the end of the 1970s, intra-industry trade began to be explained with the theoretical model. The process of meeting the export value of industrial goods with the import value of the same industrial area is called IIT.
If the level of IIT in the country increased or increased gradually, it meant a decrease in inter-industry trade. This feature is referred to as trade shift. In developed countries, especially in industrial products, a high level of IIT is observed. A consensus in the literature is that two-way trade is compatible with product differentiation and economies of scale.
Considering the same industry area, in case of unexpected fluctuations in the production costs of companies located in different regions or countries, profitability is seen in the trade of products entering the same industry, as the cost balance is disrupted. In this case, the promotion of trade is observed.
Regarding the new forms of trade, it is seen that it cannot be explained by the traditional approaches. Although traditional trade includes final goods, it is prepared according to the idea that all production takes place within the country, and the industry structure in this area is ignored. While inter-industry trade is increasing with commercial liberalization, the process is based on comparative advantage. Participating countries, on the other hand, must be similar in accordance with commercial liberalization, which has increased the interest in the diversity of goods in tastes as well as differences in varying income levels.
While the different versions seen in the same product are subject to change, this affects the increase in IIT. There is room for the production of products that respond to the needs and expectations of consumers. From this point of view, it is the differentiation experienced in the products that cause the birth of the IIT.
The presence of different versions of the same product at the stage of achieving the desired success or result in the trade balance affects the diversity in terms of product, while at the same time it affects the achievement of more economical choices in the price of the product. While this is in the balance of competition, it means producing products suitable for every income level. In addition to all these details, the homogeneous formula and the traditional approach are actually processes that are presented to complement each other. Grubel Lloyd Index application is the most widely used at this stage. According to the Glubel Lloyd index, if the export value in the industrial area is met with the import value in the same industry, IIT is formed and is explained by the formula below.
Total Trade = Intra-Industry Trade (IIT) + Inter-Industry Trade
Glubel Lloyd Intra-Industry Trade (IIT) Index = 1-[|a-b|/(a+b)]
a: Financial export amount of X product
b: Financial import amount of X product
In the obtained data, if the index approaches 1, the IIT will increase.
In a sense, the operations carried out in the field of production gain great importance in companies located in countries. At this stage, while making room for differentiation in production in the industrial field, it also makes room for domestic or foreign sales transactions. In this sense, the commercial measure can also be expressed as total trade.
The Importance of Commercial Success of Companies for the Country
Companies that manufacture in the country affect the development of trade and the increase in their inputs by making room for both domestic and foreign sales. The new versions of the products, which are offered specifically for the income level and changing needs or tastes, are implemented by the manufacturing companies.
The total trade success of the companies in the private sector as well as the companies that manufacture by the help of the government, affect the development of the positive effect at the same rate as the success in the total trade of the country.
Not only the variety of products, but also the increase in product quality and complementary products also support the increase of positive effects in the field of domestic and foreign trade.
While the productions of the companies ensured great achievements for the country, in addition to the index calculation of our country, a place was made in the list below for the world index calculation data.
You can also examine all data analysis that took place in the 12-month period in the world indexes report.
SITM Firm’s Business Operations Success
While SITM company implements its operations with its expert and experienced team, it always makes progress in the field of technology by making room for high engineering.
SITM company is effective in the realization of product diversity as well as quality processes in their production. While offering quality and guaranteed productions, you also benefit from the advantages of using for many years together with a safe shopping.
SITM is known for its domestic influence as well as its overseas sales. The company, which is known for its commercial activities in many countries of the world, especially in Europe, successfully commercializes its Turkish products.