Heterogeneity and Geography of the World Trade Collapses of the 1930s and 2000s

Abstract

This paper analyses drivers of imports during the major world trade collapses of the Great Depression (1930s; 34 countries) and the Great Recession (2000s; 173 countries). The dependent variable is the peak to trough distance of the volume of imports in the first year and 3-year-period of these episodes, respectively. The paper develops a succinct empirical model that shows a significant impact of the peak to peak distance of GDP, the share of manufacturing goods in total imports and the political system. The 3-year-period distance for the volume of imports is significantly different for the 1930s and 2000s, but this is not the case for the 1st year of the two trade collapses. Importantly, the analysis uncovers significant heterogeneity with respect to regions.

On the brink of deglobalisation…again

“…It is relevant to note that in a National Accounting framework an increase (decrease) of exports increases (decreases) GDP, while the opposite is true for imports. Hence, the choice for the import to GDP ratio avoids the problem of co-movement that could bias the use of the export to GDP ratio.14 As noted before, this finding is corroborated for the world trade collapses invan Bergeijk (2017).15 I have focused on the two major events, but other smaller episodes of world trade collapse cum deglobalisation could also be considered: for example, the years following the first oil crisis in 1973.16 The election of French Prime Minister Macron apparently constitutes an important counterexample, but also in France, the increasing strength of the popular vote against globalisation needs to be recognised.…”

“…The construction of the data sets is discussed in detail in van Bergeijk (2017). Import to GDP ratio is calculated using several sources: for the 1930s, United Nations Statistical Office (1962), Maddison (1985Maddison ( , 2006 and Birnberg and Resnick (1975) and for the 2000s, IMF World Economic Outlook Database (April 2015).…”

“…One important methodological point that this article makes is that the phenomenon of the occurrence of deglobalisation as a consequence of a collapse of world trade is more general than assumed by those who only study relatively recent developments, and that it is therefore pertinent to study the two major trade collapses and their aftermath simultaneously. 2 I have shown elsewhere (van Bergeijk, 2017) that the mechanism underlying the development of trade flows during the initial phase of the world trade collapses in the 1930s and the 2000s is comparable, but also that statistically significant differences emerge in the mid-term. While the duration of the 2008/2009 world trade downturn on average was shorter and the recovery to pre-collapse levels was much quicker than during the previous world trade collapse that was an important element of the Great Depression of the 1930s, a comparable process of deglobalisation was set in motion by the two world trade collapses.…”