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Structural Change and Slowdown of International Trade

Author

Listed:
  • Ryan Monarch

    (Federal Reserve Board)

  • Jing Zhang

    (Federal Reserve Bank of Chicago)

  • Logan Lewis

    (Federal Reserve Board of Governors)

Abstract

As countries get richer, they consume a larger share of their income in the services or less-traded sector. This structural change pattern is one of the most salient features of economic development. Consequently, as the world economy becomes more services oriented, it will become "less open" in terms of total trade over GDP. Thus structural change impacts long-run global trade. This paper quantitatively studies the impact of structural change on global trade, and we find that the world trade over GDP ratio would have been about 17 percentage points higher if structural change had not happened. We find little evidence that this drag on trade growth has become more pronounced in recent years.

Suggested Citation

  • Ryan Monarch & Jing Zhang & Logan Lewis, 2017. "Structural Change and Slowdown of International Trade," 2017 Meeting Papers 1542, Society for Economic Dynamics.
  • Handle: RePEc:red:sed017:1542
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    References listed on IDEAS

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    1. Diego Comin & Danial Lashkari & Martí Mestieri, 2021. "Structural Change With Long‐Run Income and Price Effects," Econometrica, Econometric Society, vol. 89(1), pages 311-374, January.
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    5. Caroline Betts & Rahul Giri & Rubina Verma, 2017. "Trade, Reform, and Structural Transformation in South Korea," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(4), pages 745-791, November.
    6. Sposi, Michael, 2019. "Evolving comparative advantage, sectoral linkages, and structural change," Journal of Monetary Economics, Elsevier, vol. 103(C), pages 75-87.
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    Cited by:

    1. Khan, Muhammad Aamir, 2020. "Cross sectoral linkages to explain structural transformation in Nepal," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 221-235.
    2. Saad, Ayhab F., 2021. "Institutional change in the global economy: How trade reform can be detrimental to welfare," Economic Modelling, Elsevier, vol. 95(C), pages 97-110.

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    More about this item

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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