GDL

Journal from gdlhub / 2017-08-14 11:52:53
By : Scott L. Baier, Jeffrey H. Bergstrand*, ELSEVIER (bergstrand.1@nd.edu (J.H. Bergstrand).)
Created : 2010-06-30, with 1 files

Keyword : growth,world,trade, transport, costs, income, similarity
Url : http://www.elsevier.nl / locate /econbase

In the 25th anniversary issue of the Brookings Papers on Economic Activity, Paul


Krugman [Krugman, P., 1995. Growing world trade: Causes and consequences. Brookings


Papers on Economic Activity (1), 327–377] stated that the answer to the fundamental


question ‘‘Why has world trade grown?’’ remains surprisingly disputed. He noted that


journalistic discussion tends to view the growth of world trade as due to technology-led


declines in transportation costs, while economists argue that policy-led multilateral and


bilateral trade liberalization has spurred this growth. A third potential explanation raised by


Elhanan Helpman [Helpman, E., 1987. Imperfect competition and international trade:


Evidence from fourteen industrial countries. Journal of the Japanese and International


Economies 1 (1) 62–81] and Hummels and Levinsohn (1995) [Hummels, D., Levinsohn, J.,


1995. Monopolistic competition and international trade: Reconsidering the evidence.


Quarterly Journal of Economics 110 (3) 799–836] is increased similarity of countries’


incomes. The purpose of this study is to disentangle from one another (and from income


growth) the relative effects of transport-cost reductions, tariff liberalization, and income


convergence on the growth of world trade among several OECD countries between the late


1950s and the late 1980s. In the context of the model, the empirical results suggest that


income growth explains about 67%, tariff-rate reductions about 25%, transport-cost declines


about 8%, and income convergence virtually none of the average world trade growth of our


post World War II sample.

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