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Transportation Costs and International Trade in the Second Era of Globalization

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  • David Hummels

Abstract

While the precise causes of postwar trade growth are not well understood, declines in transport costs top the lists of usual suspects. However, there is remarkably little systematic evidence documenting the decline. This paper brings to bear an eclectic mix of data in order to provide a detailed accounting of the time-series pattern of shipping costs. The ad-valorem impact of ocean shipping costs is not much lower today than in the 1950s, with technological advances largely trumped by adverse cost shocks. In contrast, air shipping costs have dropped an order of magnitude, and airborne trade has grown rapidly as a result. As a result, international trade has also experienced a significant rise in speed.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.21.3.131
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 21 (2007)
Issue (Month): 3 (Summer)
Pages: 131-154

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Handle: RePEc:aea:jecper:v:21:y:2007:i:3:p:131-154

Note: DOI: 10.1257/jep.21.3.131
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  1. David Hummels & Volodymyr Lugovskyy, 2006. "Are Matched Partner Trade Statistics a Usable Measure of Transportation Costs?," Review of International Economics, Wiley Blackwell, vol. 14(1), pages 69-86, 02.
  2. Douglass C. North, 1968. "Sources of Productivity Change in Ocean Shipping, 1600-1850," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 76, pages 953.
  3. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, Elsevier, vol. 54(1), pages 75-96, June.
  4. Hummels, David L. & Schaur, Georg, 2010. "Hedging price volatility using fast transport," Journal of International Economics, Elsevier, Elsevier, vol. 82(1), pages 15-25, September.
  5. Peter K. Schott, 2004. "Across-product Versus Within-product Specialization in International Trade," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(2), pages 646-677, May.
  6. Waters, W G, II, 1970. "Transport Costs, Tariffs, and the Pattern of Industrial Protection," American Economic Review, American Economic Association, American Economic Association, vol. 60(5), pages 1013-20, December.
  7. Anne-Célia Disdier & Keith Head, 2008. "The Puzzling Persistence of the Distance Effect on Bilateral Trade," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 37-48, February.
  8. Harley, C.K., 1988. "Coal Exports And British Shipping, 1850-1913," UWO Department of Economics Working Papers, University of Western Ontario, Department of Economics 8807, University of Western Ontario, Department of Economics.
  9. Gordon, Robert J., 1990. "The Measurement of Durable Goods Prices," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226304557, March.
  10. Antoni Estevadeordal & Brian Frantz & Alan M. Taylor, 2002. "The Rise and Fall of World Trade, 1870-1939," NBER Working Papers 9318, National Bureau of Economic Research, Inc.
  11. David Hummels & Volodymyr Lugovskyy & Alexandre Skiba, 2007. "The Trade Reducing Effects of Market Power in International Shipping," NBER Working Papers 12914, National Bureau of Economic Research, Inc.
  12. James Harrigan & Anthony J. Venables, 2004. "Timeliness, Trade and Agglomeration," CEP Discussion Papers dp0616, Centre for Economic Performance, LSE.
  13. Knick Harley, C., 1980. "Transportation, the world wheat trade, and the Kuznets Cycle, 1850-1913," Explorations in Economic History, Elsevier, Elsevier, vol. 17(3), pages 218-250, July.
  14. Harrigan, James, 2010. "Airplanes and comparative advantage," Journal of International Economics, Elsevier, Elsevier, vol. 82(2), pages 181-194, November.
  15. Harley, C. Knick, 1988. "Ocean Freight Rates and Productivity, 1740–1913: The Primacy of Mechanical Invention Reaffirmed," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 48(04), pages 851-876, December.
  16. North, Douglass, 1958. "Ocean Freight Rates and Economic Development 1730-1913," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 18(04), pages 537-555, December.
  17. Joshua Aizenman, 2000. "Endogenous Pricing to Market and Financing Costs," NBER Working Papers 7914, National Bureau of Economic Research, Inc.
  18. Bruce A. Blonigen & Wesley Wilson, 2006. "New Measures of Port Efficiency Using International Trade Data," NBER Working Papers 12052, National Bureau of Economic Research, Inc.
  19. Michael A. Clemens & Jeffrey G. Williamson, 2002. "Why Did the Tariff-Growth Correlation Reverse After 1950?," NBER Working Papers 9181, National Bureau of Economic Research, Inc.
  20. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1, October.
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