Measuring fifty years of trade globalisation

Nicole Palan (born Höhenberger), Nadia Simoes and Nuno Crespo

The World Economy, 2021, vol. 44, issue 6, 1859-1884

Abstract: Although trade globalisation is a multi‐faceted phenomenon, researchers often capture its magnitude by trade volume alone. In order to gain a deeper understanding of the phenomenon, we propose measures that also account for the interconnectedness of countries, for geographical distance and for the role of individual sectors in bilateral trade. We also improve upon existing indices by moving from a country‐level analysis (internationalisation) to a truly global perspective (globalisation). We measure trade globalisation using data from CHELEM (CEPII) over a period of 50 years, covering 72 countries for the sub‐period 1967–90 and 84 countries for 1994–2016. The results show substantial increases in all dimensions of globalisation, despite substantial differences between the measures, highlighting the need to analyse globalisation with a comprehensive set of indicators. Regarding the number of positive bilateral trade flows, globalisation was almost completed by 2016. The importance of distance also diminished throughout the period analysed, but neighbouring countries still share stronger trade relations. Results indicate that trade globalisation for high‐tech sectors varies significantly from the evolution seen in other sectors, especially large, low‐tech sectors. The latter tend to show the highest level of trade globalisation over the whole period, but the former group could catch up considerably in the future.

Date: 2021
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https://doi.org/10.1111/twec.13016

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Working Paper: Measuring Fifty Years of Trade Globalization (2019)
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