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Why hasn't trade grown faster than income? Inter-industry trade over the past century

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  • Joseph E. Gagnon
  • Andrew K. Rose

Abstract

Over the past century, the ratio of international trade to GDP has not grown substantially for most major OECD economies. We conjecture that growth in intra-industry trade has been offset by a decline in intra-industry trade. Inter-industry trade may have declined either because of biased growth in factor inputs so that factor proportions have become more similar, or because preferences have become more similar with rising per capita income.

Suggested Citation

  • Joseph E. Gagnon & Andrew K. Rose, 1990. "Why hasn't trade grown faster than income? Inter-industry trade over the past century," International Finance Discussion Papers 371, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgif:371
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    1. James R. Markusen, 2021. "Explaining the Volume of Trade: An Eclectic Approach," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 9, pages 177-186, World Scientific Publishing Co. Pte. Ltd..
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    4. Linda Hunter, 1988. "The contribution of nonhomothetic preferences to trade," Working Papers 8809, Federal Reserve Bank of Dallas.
    5. J. R. Hicks, 1953. "An Inaugural Lecture," Oxford Economic Papers, Oxford University Press, vol. 5(2), pages 117-135.
    6. Maddison, Angus, 1987. "Growth and Slowdown in Advanced Capitalist Economies: Techniques of Quantitative Assessment," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 649-698, June.
    7. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517, Elsevier.
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    Cited by:

    1. Jun Ishii & Kei-Mu Yi, 1997. "The growth of world trade," Research Paper 9718, Federal Reserve Bank of New York.

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