Does the global trade slowdown matter?

Cristina Constantinescu, Aaditya Mattoo and Michele Ruta

Journal of Policy Modeling, 2016, vol. 38, issue 4, 711-722

Abstract: Since the Global Financial Crisis, world trade growth has been subdued and lagging slightly behind GDP growth. Trade is growing more slowly not only because global GDP growth is lower, but also because trade itself has become less responsive to GDP. This article reviews the reasons behind the changing trade−income relationship and then investigates its consequences for economic growth. On the demand side, sluggish world import growth may adversely affect individual countries’ economic growth as it limits opportunities for their exports. On the supply side, slower trade may diminish the scope for productivity growth through increasing specialization and diffusion of technologies. We find preliminary evidence that the changing trade−income relationship matters, although the quantifiable effects do not appear to be large.

Keywords: Trade slowdown; Trade-income relationship; GDP growth; Productivity growth (search for similar items in EconPapers)
JEL-codes: F14 F61 F62 (search for similar items in EconPapers)
Date: 2016
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:jpolmo:v:38:y:2016:i:4:p:711-722

DOI: 10.1016/j.jpolmod.2016.05.013

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