The country similarity theory argues that most trade in manufactured goods should be between countries with similar levels of economic development.

Question

Quizplus · Accepted Answer

The country similarity theory, particularly associated with the Linder hypothesis, suggests that countries with similar levels of economic development and consumer preferences are more likely to engage in trade of manufactured goods with each other. This is because they produce and demand similar types of goods, leading to increased trade between such countries.

The Country Similarity Theory Argues That Most Trade in Manufactured