Quantifying the Evolution of World Trade, 1870-1949

30 Pages Posted: 19 Jun 2012 Last revised: 29 Mar 2014

See all articles by Mariko J. Klasing

Mariko J. Klasing

University of Groningen - Faculty of Economics and Business

Petros Milionis

University of Groningen - Faculty of Economics and Business

Date Written: September 2013

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 conform 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, while the world's level of trade openness in 1913 was comparable to that in 1974.

Keywords: International Trade, Purchasing Power Differences

JEL Classification: F01, F15, N10, N70

Suggested Citation

Klasing, Mariko J. and Milionis, Petros, Quantifying the Evolution of World Trade, 1870-1949 (September 2013). Available at SSRN: https://ssrn.com/abstract=2087678 or http://dx.doi.org/10.2139/ssrn.2087678

Mariko J. Klasing (Contact Author)

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

Petros Milionis

University of Groningen - Faculty of Economics and Business ( email )

Nettelbosje 2
Groningen, Groningen 9700 AV
Netherlands

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