Quantifying the evolution of world trade, 1870–1949

Mariko Klasing and Petros Milionis

Journal of International Economics, 2014, vol. 92, issue 1, 185-197

Abstract: The typical narrative regarding the evolution of world trade prior to World War II refers to a secular rise starting around 1870 and a subsequent collapse beginning in 1914. This narrative, however, is based on measures of trade openness that do not fully take into account purchasing power differences across countries. Due to lack of alternative data, the measures employed in the existing literature are typically based on non-PPP-adjusted trade data denominated by PPP-adjusted GDP data. The present paper seeks to resolve this inconsistency by constructing new trade share estimates for 62 countries, representing 90% of world GDP, for the period from 1870 to 1949. Our estimates combine historical import and export figures with non-PPP-adjusted GDP values that we estimate via the short-cut method. Our estimates confirm qualitatively the narrative of a dramatic rise and fall of world trade over this period. Yet, they indicate that this rise and fall was quantitatively much more pronounced. We find that trade shares were on average 38% higher than previously documented and the world's level of trade openness in 1913 was comparable to that in 1974.

Keywords: International trade; Purchasing power differences; Short-cut method (search for similar items in EconPapers)
JEL-codes: F01 F15 N10 N70 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:92:y:2014:i:1:p:185-197

DOI: 10.1016/j.jinteco.2013.10.010

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