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World-Trade Growth Accounting

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  • Peter Egger
  • Sergey K. Nigai

Abstract

We undertake a trade-growth accounting exercise by decomposing data on changes in bilateral international trade flows into their direct (endowment accumulation, productivity growth, changes in trade costs, changing preferences) and indirect components (general equilibrium effects). Furthermore, we distinguish between the (potentially partly endogenous) direct and the deep drivers of trade by extending standard new trade models to include endogenous factor accumulation, R&D driven productivity growth, and endogenous changes in expenditures shares on manufacturing goods and services. We quantify the importance of the direct and deep drivers of the growth of bilateral and multilateral trade of 67 economies over 20 consecutive years since 1988 for three trade outcomes: changes in growth rates across different country pairs, changes in levels of trade flows, and changes in trade to GDP ratio. The results suggest that changes in shocks to endogenous endowment accumulation and trade costs have been the most important drivers of trade in the sample at hand, whereas productivity growth and changes in preferences appear to have been quantitatively less important.

Suggested Citation

  • Peter Egger & Sergey K. Nigai, 2016. "World-Trade Growth Accounting," CESifo Working Paper Series 5831, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5831
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    Cited by:

    1. Hugo Rojas-Romagosa & Eddy Bekkers & Joseph F. Francois, 2015. "Melting Ice Caps and the Economic Impact of Opening the Northern Sea Route," CPB Discussion Paper 307, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Eddy Bekkers & Michael Landesmann & Indre Macskasi, 2017. "Trade in Services versus Trade in Manufactures: The Relation between the Role of Tacit Knowledge, the Scope for Catch up, and Income Elasticity," wiiw Working Papers 139, The Vienna Institute for International Economic Studies, wiiw.
    3. Larch, Mario & Anderson, James E. & Yotov, Yoto V., 2017. "Trade Liberalization, Growth, and FDI: A Structural Estimation Framework," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168071, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    international trade; trade-growth accounting; trade costs;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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