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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.

Suggested Citation

  • David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
  • 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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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.21.3.131
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    References listed on IDEAS

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    1. Knick Harley, C., 1980. "Transportation, the world wheat trade, and the Kuznets Cycle, 1850-1913," Explorations in Economic History, Elsevier, vol. 17(3), pages 218-250, July.
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    3. Knick Harley, C., 1989. "Coal exports and British shipping, 1850-1913," Explorations in Economic History, Elsevier, vol. 26(3), pages 311-338, July.
    4. 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.
    5. Hummels, David L. & Schaur, Georg, 2010. "Hedging price volatility using fast transport," Journal of International Economics, Elsevier, vol. 82(1), pages 15-25, September.
    6. repec:ucp:bknber:9780226304557 is not listed on IDEAS
    7. Harrigan, James, 2010. "Airplanes and comparative advantage," Journal of International Economics, Elsevier, vol. 82(2), pages 181-194, November.
    8. Hummels, David & Lugovskyy, Volodymyr & Skiba, Alexandre, 2009. "The trade reducing effects of market power in international shipping," Journal of Development Economics, Elsevier, vol. 89(1), pages 84-97, May.
    9. Harrigan, James & Venables, Tony, 2004. "Timeliness, trade and agglomeration," LSE Research Online Documents on Economics 2300, London School of Economics and Political Science, LSE Library.
    10. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    11. 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, vol. 48(04), pages 851-876, December.
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    13. Aizenman, Joshua, 2004. "Endogenous pricing to market and financing costs," Journal of Monetary Economics, Elsevier, vol. 51(4), pages 691-712, May.
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    18. 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, February.
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