what is the grubel lloyd index that is used to measure the level of intra indysty trade? country A exports $6 billion of perfumes,and the imports of perfume in country B is equal to the value of $2 billion
Answers
The Grubel–Lloyd index measures intra-industry trade of a particular product. It was introduced by Herb Grubel and Peter Lloyd in 1971.
{\displaystyle GL_{i}={\dfrac {(X_{i}+M_{i})-\left|X_{i}-M_{i}\right|}{X_{i}+M_{i}}}=1-{\dfrac {\left|X_{i}-M_{i}\right|}{X_{i}+M_{i}}}\qquad ;\ 0\leq GL_{i}\leq 1}{\displaystyle GL_{i}={\dfrac {(X_{i}+M_{i})-\left|X_{i}-M_{i}\right|}{X_{i}+M_{i}}}=1-{\dfrac {\left|X_{i}-M_{i}\right|}{X_{i}+M_{i}}}\qquad ;\ 0\leq GL_{i}\leq 1}
where Xi denotes the export, Mi the import of good i.
If GLi = 1, there is a good level of intra-industry trade. This means for example the Country in consideration Exports the same quantity of good i as much as it Imports. Conversely, if GLi = 0, there is no intra-industry trade at all. This would mean that the Country in consideration only either Exports or only Imports good i.