Grubel–Lloyd index explained

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

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}} ; 0 \leq GL _{i} \leq 1

where X_i denotes the export, M_i the import of good i.

If GL_i = 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 GL_i = 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.

References

• Grubel . Herbert G. . Peter J. . Lloyd . 1971 . The Empirical Measurement of Intra-Industry Trade . Economic Record . 47 . 4 . 494–517 . 10.1111/j.1475-4932.1971.tb00772.x .
• Book: Grubel, Herbert G. . Peter J. . Lloyd . Intra-industry trade: the theory and measurement of international trade in differentiated products . Wiley . New York . 1975 . 0-470-33000-7 .