Part 1. Index of Inn's-Industry Trade (111) for Country In class, we learned how to calculate the HT index for each industry. How can it measure for a country as a whole? In Appleyard book (p.202), If we designate commodity categories by g, represent exports and imports in each category by Xi and Mt, respectively, total exports and imports by X and M, respectively, and call our index of intra-industry trade, the formula for calculating the degree of country HT is 2|(X,.IX) (M.IM)I ' 2mm + (Mp/MM In this formula, Xi /X (or Mi /M) is the percentage of the country's total exports (or imports) in category; and |(Xi A!) (Mi AMOl indicates the absolute value of the difference between the share of exports and imports in the category. The [(Xi 00 + (Mt /M)] indicates the sum of the export and import shares in the category. The 2 sign means that we are Summing over all the commodity categories, and the denominator must have a value of 2 because 100 percent of exports are being added to 100 percent of imports. Use the data in the following table to calculate countries IIT index. Which country has the highest intra- industry trade? I: Exports ($) Imports ($) Country A Good X 10.000 5,000 Good Y 8,000 1,000 Good Z 0 12,000 Country B Good R 5,000 0 Good S 400 6,000 Good T 1.600 1,000 Country C Good M 2.000 1,800 Good N 1,000 1,500 Good O 1,500 1,200Part II. Short Essay 1. Discuss at least three reasons why we might expect countries to engage in intra-industry trade. Find at least one example of intra-industry trade in US. What would the Product Life Cycle theory suggest about the prospects of developing countries in exporting goods to developed countries? Can you use one real example to explain PLC theory? Distinguish between the external return to scale and internal return to scale. How does the new trade theory of economic returns to scale differ from the traditional trade theories like Ricardian model, and Heckscher Ohlin model in explaining the international trade pattern? What is the Wtheorem? How does theorem predict changes in factors usage in production and change in trading volume if there is an inux of immigrant? Part III. Data Mining 1. Calculate the intra-industry trade index for ENGINES, TURBINES 8:. POWER TRANSMSN EQUIP (NAICS 3336), RUBBER PRODUCTS (NAICS 3262), WAICS 3152), and PHARMACEUTICALS & MEDICINES (NAICS - 3254) in 2019. To obtain the export and import values, access the U. S. WExpress Web site (hptseexportgov'SED. Click on \"NatiOnal Trade Da \"then \"Global Patterns of U. S. Merchandise Trade.\" Change item: NAICS -_.IO_TAL and nd each assigned industry by using Product Code tab. Click Update and change the display year from 2019 to 2019. You may need to collect both export and import data in 2019 separately and keep the data in Excel spreadsheet for calculation. a. Among Engines, Rubbers, Apparel, and Medicines, which product do you expect U.S. to have a higher index of intra-industry trade? Why? b. Calculate the intra-industry trade index for each product in 2019 using the formula Minimum of imports and exports % (Imports + exports) (index of intra-industry trade) = Does your calculation cenrm your expectation? If your answers did not conrm your expectation, explain
