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Trade Costs in the First Wave of Globalization

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  • David S. Jacks
  • Christopher M. Meissner
  • Dennis Novy

Abstract

What drives globalization today and in the past? We employ a new micro-founded measure of bilateral trade costs based on a standard model of trade in differentiated goods to address this question. These trade costs gauge the difference between observed bilateral trade and frictionless trade. They comprise tariffs, transportation costs and all other factors that impede international trade but which are inherently difficult to observe. Trade costs fell on average by ten to fifteen percent between 1870 and 1913. We also use this measure to decompose the growth of global trade over that period and find that roughly 44 percent of the global trade boom can be explained by reductions in trade costs; the remaining 56 percent is attributable to economic expansion.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12602.

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Date of creation: Oct 2006
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Handle: RePEc:nbr:nberwo:12602

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Cited by:
  1. Yann Duval & Chorthip Utoktham, 2011. "Trade Facilitation in Asia and the Pacific: Which Policies and Measures affect Trade Costs the Most?," Working Paper Series 111, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  2. Toke Aidt & Peter S. Jensen, 2011. "Workers of the World, Unite! Franchise Extensions and the Threat of Revolution in Europe, 1820-1938," CESifo Working Paper Series 3417, CESifo Group Munich.
  3. David S. Jacks & Christopher M. Meissner & Dennis Novy, 2009. "Trade Booms, Trade Busts, and Trade Costs," CESifo Working Paper Series 2767, CESifo Group Munich.
  4. Festus Ebo Turkson, . "Logistics and Bilateral Exports in Developing Countries: A Multiplicative Form Estimation of the Logistics Augmented Gravity Equation," Discussion Papers 11/06, University of Nottingham, CREDIT.
  5. Kevin H. O'Rourke & Ahmed S. Rahman & Alan M. Taylor, 2007. "Trade, Knowledge, and the Industrial Revolution," NBER Working Papers 13057, National Bureau of Economic Research, Inc.
  6. Richard Baldwin & Daria Taglioni, 2011. "Gravity Chains: Estimating Bilateral Trade Flows When Parts And Components Trade Is Important," NBER Working Papers 16672, National Bureau of Economic Research, Inc.
  7. David S. Jacks & Christopher M. Meissner & Dennis Novy, 2006. "Trade Costs in the First Wave of Globalization," NBER Working Papers 12602, National Bureau of Economic Research, Inc.
  8. Kim, Sooil & Reimer, Jeffrey J. & Gopinath, Munisamy, 2009. "The Impact of Trade Costs on Firm Entry, Exporting, and Survival in Korea," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49185, Agricultural and Applied Economics Association.
  9. Milionis, Petros & Klasing, Mariko J., 2012. "Reassessing the Evolution of World Trade, 1870-1949," GGDC Research Memorandum GD-126, Groningen Growth and Development Centre, University of Groningen.
  10. Novy, Dennis, 2006. "Is the Iceberg Melting Less Quickly? International Trade Costs after World War II," The Warwick Economics Research Paper Series (TWERPS) 764, University of Warwick, Department of Economics.
  11. Moritz Schularick & Solomos Solomou, 2011. "Tariffs and economic growth in the first era of globalization," Journal of Economic Growth, Springer, vol. 16(1), pages 33-70, March.
  12. Stéphane BECUWE (GREThA, CNRS, UMR 5113) & Bertrand BLANCHETON (GREThA, CNRS, UMR 5113) & Léo CHARLES (GREThA, CNRS, UMR 5113), 2012. "The decline of French trade power during the first globalization (1850-1913)," Cahiers du GREThA 2012-22, Groupe de Recherche en Economie Théorique et Appliquée.
  13. David S. Jacks, 2011. "Defying Gravity: The 1932 Imperial Economic Conference and the Reorientation of Canadian Trade," NBER Working Papers 17242, National Bureau of Economic Research, Inc.

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