UK Trade Flows to Major Economies, 2000-2014
One-way trade flows - Comparative Advantage
Countries trade more with countries that are similar to them in terms of technologies and factor endowments than they trade with countries that are dissimilar. Consider trade among the Eurozone countries, the US, and India. The magnitude of trade flows between the US and EU are several times larger than those between either country and India.
Two-way trade flows: The `New' trade theory, which emphasizes increasing returns to scale, explains why similar countries import and export goods in the same industrial sector. More recently, the rise of global value chains provides another explanation for within-sector two-way trade.