Question

What is the Grubel Lloyd index, the index that is used to measure the level of intra industry
trade? Country A exports $6billion of perfumes, and the imports of perfumes in Country B
is equal to the value of $2billion.
a) 0.75
b) 0.10
C) 0.5
d) 0.66​

Answer 1

Answer:

The Grubel–Lloyd index measures intra-industry trade of a particular product. It was introduced by Herb Grubel and Peter Lloyd in 1971.

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.