Country similarity theory is developed by Swedish economist Steffen
Linder in 1961. According to this theory two types of trade is being traded.
They are:
(1)Inter industry
trade: It is the
exchange of goods produced by one industry in country A for goods produced
by a different industry in country B. It is usually trade between two
industry's of two country's.
(2)Intra industry trade: It is the trade between two country's of goods produced by same
industry. It is actually the trade of same industries between two
country's.
Ex-Germany traded BMW to Japan in exchange of Toyota.
