Globalization, Trade, and Inequality: Evidence from a New Database

Ingo Borchert, Mario Larch, Serge Shikher and Yoto Yotov
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Ingo Borchert: University of Sussex Business School, CITP, UKTPO
Mario Larch: University of Bayreuth, CEPII, CESifo, GEP, ifo Institute
Serge Shikher: United States International Trade Commission

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: We introduce the International Trade and Production Database for Simulation (ITPDS) and use it, in combination with the International Trade and Production Database forEstimation (ITPD-E), to quantify the impact of globalization on bilateral trade, realincome, and inequality in the world at the industry level in 1990-2019. To perform theanalysis we rely on a new quantitative trade model, which enables us to estimate the magnitude of globalization and then perform a counterfactual analysis of the impact of globalization on real output within the same framework. Our estimates reveal that, on average, bilateral globalization forces have led to a remarkable increase in international trade of about 570%, between 1990 and 2019, with very wide but intuitive variation across industries. Our counterfactual analysis reveals that globalization has benefited most countries but relatively more so smaller and more open economies, which are typically developing countries. As a result, this ‘catch-up’ implies less crosscountry income inequality.

Keywords: Trade dataset; Domestic trade; Globalization; Inequality; Disaggregated simulation analysis; Gravity (search for similar items in EconPapers)
JEL-codes: F10 F14 F63 O11 O19 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-int
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Working Paper: Globalization, Trade, and Inequality: Evidence from a New Database (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:1124

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