How Far Has Globalization Gone? A Tale of Two Regions

Rodolfo Campos, Samuel Pienknagura and Jacopo Timini

No 2023/255, IMF Working Papers from International Monetary Fund

Abstract: We study the evolution of trade globalization in a set of countries in Latin America (mostly the largest ones) and Asia over the past 25 years. Relying on structural gravity models, we first estimate a proxy of trade globalization that captures the ease of trading internationally with respect to trading domestically. Results indicate that the evolution of trade globalization since the mid-1990s has been similar between the two regions, but very heterogeneous within them. Trade globalization has been particularly strong in agriculture, mining and manufacturing, but has lagged in services. The paper also documents that trade globalization has been particularly strong in agriculture, mining and manufacturing, but it lagged in services. Within region heterogeneity is associated to a set of trade policy instruments, including tariffs, non-tariff measures, WTO membership. and trade agreements. Next, we quantify the economic implications of the estimated globalization trends. Simulations of a multi-sector trade model point to heterogeneous long-term impacts of globalization on GDP—some countries exhibiting substantial gains and others experiencing large losses—, with no single sector playing a preponderant role.

Keywords: Trade; Globalization; Structural gravity; Latin America; Asia; trade globalization; globalization trend; IMF working paper 23/255; model point; globalization process; Trade policy; Manufacturing; Agricultural sector; Tariffs; Caribbean; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 32
Date: 2023-12-08
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Working Paper: How far has globalization gone? a tale of two regions (2023)
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