In the 1960s, the evidence of intra-industry trade (IIT) between countries of similar development levels severely limited the scope of traditional theories of international trade based on the concept of comparative advantage. Originally, such simultaneous exports and imports within industries led to a concept "in search of a (new) theory". Today, a synthesis of determinants of IIT and inter-industry trade is attained. And progress during the last 15 years has been such that today, it is the theory which is in search of an appropriate empirical methodology. The contemporary theoretical synthesis is based on the widespread view that monopolistic competition and (internal) increasing returns lead to IIT between similar countries, whereas the old comparative advantage is still be at work for countries separated by a high economic distance, i.e. a large difference in factor endowments, technology levels etc.
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