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Structural Change and Global Trade

Author

Listed:
  • Logan Lewis

    () (Federal Reserve Board)

  • Ryan Monarch

    () (Federal Reserve Board)

  • Michael Sposi

    () (Southern Methodist University)

  • Jing Zhang

    () (Federal Reserve Bank of Chicago)

Abstract

Services, which are less traded than goods, rose from 58 percent of world expenditure in 1970 to 79 percent in 2015. Using a Ricardian trade model incorporating endogenous structural change, we quantify how this substantial shift in consumption has affected trade. Without structural change, we find that the world trade to GDP ratio would be 15 percentage points higher by 2015, about half the boost delivered from declining trade costs. In addition, this structural change has lowered the global welfare gains from trade integration by almost 40 percent over the past four decades. Absent further reductions in trade costs, ongoing structural change implies that world trade as a share of GDP would eventually decline. Going forward, higher income countries gain relatively more from reducing services trade costs than from reducing goods trade costs.

Suggested Citation

  • Logan Lewis & Ryan Monarch & Michael Sposi & Jing Zhang, 2020. "Structural Change and Global Trade," Departmental Working Papers 2002, Southern Methodist University, Department of Economics.
    • Handle: RePEc:smu:ecowpa:2002
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    File URL: https://ftp1.economics.smu.edu/WorkingPapers/2020/SPOSI/SPOSI-2020-02.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Ricardo Reyes-Heroles, 2018. "Globalization and Structural Change in the United States: A Quantitative Assessment," 2018 Meeting Papers 1027, Society for Economic Dynamics.
    2. Michael Sposi & Jing Zhang & Kei-Mu Yi, 2018. "Accounting for Structural Change Over Time: A Case Study of Three Middle-Income Countries," 2018 Meeting Papers 1141, Society for Economic Dynamics.
    3. Michael Sposi & Jing Zhang & Kei-Mu Yi, 2019. "Structural Change and Deindustrialization," 2019 Meeting Papers 1328, Society for Economic Dynamics.

    More about this item

    Keywords

    Globalization; Structural Change; International Trade.;

    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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