share of global trade by country

Latest trends in world trade 2017-2018 26 General trends and drivers of trade in 2017 28 World trade and output in early 2018 37 IV. In 2016, the EU, the United States and China recorded the world’s highest trade values in goods, together accounting for 46 % of global exports of goods and 45 % of global imports. If all asymmetries were coming from CIF-FOB differences, then we should only see positive values in the chart (recall that, unlike FOB values, CIF values include the cost of transportation, so CIF values are larger). cars). The evidence from the impact of trade on firm productivity confirms this: “reshuffling workers from less to more efficient producers” means closing down some jobs in some places. A country or a person is said to have a ‘comparative advantage’ if they have the ability to produce something at a lower opportunity cost than their trade partners. Between 2007 and 2012 the EU-28’s share of global trade fell strongly, before recovering somewhat through until 2017. Estimating trade flows: Trading partners and trading volumes (No. Through econometric modeling, the paper shows that this relationship is not just a correlation driven by other factors: their findings suggest that distance imposes a significant barrier to trade. In this entry we analyze available data and research on international trade patterns, including the determinants and consequences of globalization over the last couple of decades. After the Second World War trade within Europe rebounded, and from the 1990s onwards exceeded the highest levels of the first wave of globalization. In the ‘Sources’ tab in the chart you find a full explanation of how we constructed all series, as well as links to the original raw data. Also, adding to the complexity, countries often rely on measurement protocols that are developed alongside these approaches and concepts that are not perfectly compatible to begin with. These estimates are in constant prices (i.e. the IMF’s (2018) working paper on ‘New Estimates for Direction of Trade Statistics’. Here’s a list of the most important ones: In addition to these sources, there are also many other academic projects that publish data on international trade. The corrections applied in the OECD’s ‘balanced’ series make this the best source for cross-country comparisons. Difference between ‘goods’ and ‘merchandise’: how are re-importing, re-exporting, and intermediary merchanting transactions recorded? The visualization here shows, through a series of maps, the geographic distribution of French firms that export to France’s neighboring countries. As we can clearly see in this chart, different data sources tell often very different stories. Melitz, J. Chart III.2Volume of world merchandise trade by selected region, 1992-99 (file size 78KB) 1. As global production chains become more complex, countries find it increasingly difficult to unambiguously establish the origin and final destination of merchandise, even when rules are established in the manuals. The visualization here shows the evolution of the cumulative number of preferential trade agreements that are in force across the world, according to the World Trade Organization (WTO). Learn how the World Bank Group is helping countries with COVID-19 (coronavirus). The global trade finance market was valued at $39714.2 million in 2018 and is expected to reach $56,065.7 million by 2026, registering a CAGR of 3.79% from 2019 to 2026. Available online here. Exchange rates: how are values converted from local currency units to the currency that allows international comparisons (most often the US-$)? Some of these institutions are fairly obvious (e.g. Today about one fourth of total global production is exported. This metric gives us an idea of integration, because it captures all incoming and outgoing transactions. the sum of the value of exports from all Western European countries, divided by total GDP in this region). This site uses cookies to optimize functionality and give you the best possible experience. The chart here shows the value of world exports over the period 1800-2014. The forgone opportunities of production are key to understand this concept. The vertical position of the dots represents the percent change in manufacturing employment for working age population; and the horizontal position represents the predicted exposure to rising imports (exposure varies across regions depending on the local weight of different industries). The IMF publishes a range of time series data on IMF lending, exchange rates and other economic and financial indicators. apples. If you continue to navigate this website beyond this page, cookies will be placed on your browser. Asymmetries in international trade statistics are large and they arise for a variety of reasons. Trade transactions include goods (tangible products that are physically shipped across borders by road, rail, water, or air) and services (intangible commodities, such as tourism, financial services, and legal advice). Cambridge University Press. ), The most famous study looking at this question is Autor, Dorn and Hanson (2013): “The China syndrome: Local labor market effects of import competition in the United States”.8. (NB. According to IMF data, for example, the value of goods that Canada reports exporting to the US is almost $20 billion more that the value of goods that the US reports importing from Canada. Correlates of War Project Trade Data Set Codebook, Version 4.0. For example, for China in 2010, the estimated total value of goods exports was $1.48 trillion according to World Bank Data, but it was $1.58 trillion according to WTO Data. export-to-GDP ratios). Handbook of economic growth, 1, 1419-1497. But of course efficiency is not the only relevant consideration here. Please consult our full legal disclaimer. Foreign value added in trade peaked in 2010–2012 after two decades of continuous increase. In the late 1970s, North-South agreements accounted for more than half of all agreements – in 2010, they accounted for about one quarter. This approach is problematic because it fails to consider welfare gains from increased product variety, and obscures complicated distributional issues such as the fact that poor and rich individuals consume different baskets so they benefit differently from changes in relative prices.15, Ideally, studies looking at the impact of trade on household welfare should rely on fine-grained data on prices, consumption and earnings. (NB. Among the potential growth-enhancing factors that may come from greater global economic integration are: Competition (firms that fail to adopt new technologies and cut costs are more likely to fail and to be replaced by more dynamic firms); Economies of scale (firms that can export to the world face larger demand, and under the right conditions, they can operate at larger scales where the price per unit of product is lower); Learning and innovation (firms that trade gain more experience and exposure to develop and adopt technologies and industry standards from foreign competitors).2. Here is a stacked area chart showing the total composition of exports by partnership. Documents listed here are downloadable in MS Excel format. For each country, we exclude trade in services, and we focus only on estimates of the total value of exported goods, expressed as shares of GDP.37. You can find a similar chart using different data sources and time periods in Ventura, J. So households are affected both as consumers and as wage earners. You can read more about these economic concepts, and the related predictions from economic theory, in Chapter 18 of the textbook The Economy: Economics for a Changing World. The U.S. Accounts for Over 28.9% of Global Market Size in 2020, While China is Forecast to Grow at a 4.9% CAGR for the Period of 2020-2027 The Trade Finance market in the U.S. is estimated at US$17.7 Billion in the year 2020. They loaded 58 per cent and unloaded 65 per cent of the world total. First, there has been a substantial decrease in the relative importance of food exports since 1960s in most countries (although globally in the last decade it has gone up slightly). This reveals that, despite the great variation between countries, there is a common trend: Over the last couple of decades trade openness has gone up in most countries. Different exchange rates will lead to conflicting estimates, even if figures in local currency units are consistent. You can add more series by clicking on the option ‘ The imported goods and services incorporated in a country’s exports are a key indicator of economic integration – they tell us something about ‘global value chains’, where the different stages of the production process are located across different countries. The colors reflect the percentage of firms which export to each specific country. by Esteban Ortiz-Ospina and Diana Beltekian, Explaining trade patterns: Theory and Evidence. 1. Cambridge University Press. For example differences in customs and tax regimes, and differences between “general” and “special” trade systems (i.e. Inconsistent attribution of trade partners: how is the origin and final destination of merchandise established? As we can see, intercontinental trade was very dynamic, with volumes varying considerably across time and from empire to empire. If you move the time slider below the tree map, you can also change the year for which the data is plotted.). Such differences between sources can also be found for rich countries where statistical agencies tend to follow international reporting guidelines more closely. This is consistent with the fact that, after the global financial crisis, there has been a slowdown in the rate of growth of trade in goods and services, relative to global GDP. Trade is recognized as a key factor for the 2030 Agenda, including poverty reduction and economic growth (Tipping and Wolfe, 2016). More information can be found at the IMF’s (2018) working paper on ‘New Estimates for Direction of Trade Statistics’. The US is the world’s second-largest trader at 11.5 percent of total trade, followed by Germany at 7.7 percent. the exchange of broadly similar goods and services is becoming more and more common). It required downloading trade data from many different sources, collecting the relevant series, and then standardising them so that the units of measure and the geographical territories were consistent. You can learn more about New Trade Theory, and the empirical support behind it, in Krugman’s Nobel lecture. Are these mechanisms supported by the data? These numbers include notified and non-notified preferential agreements (the source reports that only about two-thirds of the agreements currently in force have been notified to the WTO), and are disaggregated by country groups. Pavcnik, N. (2002). Bloom, N., Draca, M., & Van Reenen, J. Colombia is a notable case in point: food went from 77% of merchandise exports in 1962, to 15.9% in 2015. This may sound counterintuitive, but it is not: If you are good at many things, it means that investing time in one task has a high opportunity cost, because you are not doing the other amazing things you could be doing with your time and resources. American economic review, 89(3), 379-399. In a similar way, if we look at country-level data from the last half century we find that there is also a correlation between economic growth and trade: countries with higher rates of GDP growth also tend to have higher rates of growth in trade as a share of output. Handbook of economic growth, 1, 555-677. Following this logic, Frankel and Romer find evidence of a strong impact of trade on economic growth. The idea is that specialization allows countries to reap greater economies of scale (i.e. This is no consolation to people who lost their job. The textbook The Economy: Economics for a Changing World explains this in more detail here: https://core-econ.org/the-economy/book/text/18.html#1810-trade-and-growth. This chart shows an extraordinary growth in international trade over the last couple of centuries: Exports today are more than 40 times larger than in 1913. (NB. For now, the picture is upbeat. 6, Bloom, Draca and Van Reenen (2016) examined the impact of rising Chinese import competition on European firms over the period 1996-2007, and obtained similar results. This basic correlation is shown in the chart here, where we plot average annual change in real GDP per capita, against growth in trade (average annual change in value of exports as a share of GDP).1. This is because, while trade affects wages and employment, it also affects the prices of consumption goods. (NB. Our World in Data is free and accessible for everyone. A preferential trade agreement is a trade pact that reduces tariffs between the participating countries for certain products. For more details on this see Forstater, M. (2018) Illicit Financial Flows, Trade Misinvoicing, and Multinational Tax Avoidance: The Same or Different?, CGD Policy Paper 123, available online at: https://www.cgdev.org/publication/illicit-financial-flows-trade-misinvoicing-and-multinational-tax-avoidance. Technology, geography, and trade. The concept of comparative advantage predicts that if all countries had identical endowments and institutions, then there would be little incentives for specialization, because the opportunity cost of producing any good would be the same in every country. The visualization, from Eaton and Kortum (2002)27, graphs ‘normalized import shares’ against distance. Integration in the goods markets is measured here through the ‘trade openness index’, which is defined by the sum of exports and imports as share of GDP. This interactive chart shows trade in services as share of GDP across countries and regions.). In the chart we see a large drop in the interwar period. Similarly, for the period 1960-2015, the World Bank’s World Development Indicators published an alternative set of estimates, which are similar but not identical to those included from the Penn World Tables (9.1). That is, the share of the value of exports that comes from foreign inputs. So Viet Nam gained more and exported more overall. Understanding this transformative process is important because trade has generated gains, but it has also had important distributional consequences. Available online here. Each dot represents a country-pair from a set of 19 OECD countries, and both the vertical and horizontal axis are expressed on logarithmic scales. In countries with relative abundance of certain factors of production, the theory of comparative advantage predicts that they will export goods that rely heavily in those factors: a country typically has a comparative advantage in those goods that use more intensively its abundant resources. This is the approach followed in Atkin, Faber, and Gonzalez-Navarro (2018): “Retail globalization and household welfare: Evidence from Mexico”.16. This chart was inspired by a chart from Helpman, E., Melitz, M., & Rubinstein, Y. Porto (2006) looks at the distributional effects of. Here is the same chart but showing imports, rather than exports.). (NB. October 2020 Trade in Goods and Services. As we explain below, part of the asymmetries in trade data come from the fact that, although ‘merchandise’ and ‘goods’ are equivalent in the dictionary, these two terms often measure related but different things. changes in wages that arise from the fact that trade has an impact on the demand for specific types of workers, who could be employed in both the traded and non-traded sectors). Many traded services make merchandise trade easier or cheaper—for example, shipping services, or insurance and financial services. Firms around the world import goods and services, in order to use them as inputs to produce goods and services that are later exported. Railroads of the Raj: Estimating the impact of transportation infrastructure. This issue is actually also a source of disagreement between National Accounts data and customs data. Using the option ‘relative’, at the bottom of the chart, you can see the proportional contribution of purchases from each region. Secondly, data are adjusted for several specific large problems known to drive asymmetries. Other papers have applied the same approach to richer cross-country data, and they have found similar results. And they found evidence of efficiency gains through two related channels: innovation increased and new existing technologies were adopted within firms; and aggregate productivity also increased because employment was reallocated towards more technologically advanced firms.7. (NB. This means that countries exported goods that were very different to what they imported – England exchanged machines for Australian wool and Indian tea. The graph depicts the ‘evolution of three indicators measuring integration in commodity, labor, and capital markets over the long run. If trade is causally linked to economic growth, we would expect that trade liberalization episodes also lead to firms becoming more productive in the medium, and even short run. You can click on the option marked ‘Linear’, on top of the vertical axis, to change into a logarithmic scale. Hopefully the discussion and checklist above can help researchers better interpret and choose between conflicting data sources. Chart III.1Value of world merchandise trade by region, 1992-99 (file size 101KB) 1. Firm Reorganization, Chinese Imports, and US Manufacturing Employment. Retrieved from http://www.jstor.org/stable/10.1086/379944 doi:1. Learn how the World Bank Group is helping countries with COVID-19 (coronavirus). These projects tend to rely on data from one or more of the sources above; and they typically process and merge series in order to improve coverage and consistency. As a consequence, local markets respond, and prices change. And the second lesson is that, because of statistical glitches, researchers and policymakers should always take analysis of trade data with a pinch of salt. In particular, comparing changes in employment at the regional level misses the fact that firms operate in multiple regions and industries at the same time. And there are also large bilateral discrepancies within sources. A global view of economic growth. Here’s a checklist of issues to keep in mind when comparing sources. China as one of the most populous countries in the world is the most prominent example, ranking only 61st for trade. The fact that trade diminishes with distance is also corroborated by data of trade intensity within countries. Language and foreign trade. In some countries services are today an important driver of trade: In the UK services account for about 45% of all exports; and in the Bahamas almost all exports are services (about 87% in 2016). 40 Merchandise trade 42 Trade in commercial services 48 Global value chains 62 Digital trade 65 These include conceptual inconsistencies across measurement standards, as well as inconsistencies in the way countries apply agreed protocols. (2008). Even if you focus on what seems to be the same indicator for the same year in the same country, discrepancies are large. The following visualizations provides a comparison of intercontinental trade, in per capita terms, for different countries. Let’s take a look at the available empirical evidence. See: (i) Feenstra, R. C., & Weinstein, D. E. (2017). Broadly speaking, there are two main approaches used to estimate international merchandise trade: Under these two approaches, it is common to distinguish between ‘traded merchandise’ and ‘traded goods’. The Review of Economic Studies, 69(1), 245-276. Even if trade is not a major driver of income inequalities, it’s important to keep in mind that public policies, such as unemployment benefits and other safety-net programs, can and should help redistribute the gains from trade. In Italy, for example, Eurostat figures of the value of exported goods in 2015 are 10% higher than the merchandise trade figures published by the OECD. Frankel, J. But this has been changing quickly over the last couple of decades, and today trade between non-rich countries is just as important as trade between rich countries. In addition Western Europe then started to increasingly trade with Asia, the Americas, and to a smaller extent Africa and Oceania. Undoubtedly, trade has come with both benefits and daunting challenges to countries involved, especially in African nations, where primary and intermediate merchandise formed a substantial share of exports. This figure shows the increasingly important role of trade between developing countries (South-South trade), vis-a-vis trade between developed and developing countries (North-South trade). In this chart you can add countries by choosing the option on the bottom left; or you can compare countries around the world by clicking on ‘Map’ on the chart.). For some households, the net effect is positive. Share of Global GDP by Country; Foreign Exchange Rate China / U.S. Exports to China; India. You have the permission to use, distribute, and reproduce in any medium, provided the source and authors are credited. (NB. 2016. As we show here, this interpretation of the data is not appropriate, since mismatches in the data can, and often do arise from measurement inconsistencies rather than malfeasance.44. Berlingieri, G., Breinlich, H., & Dhingra, S. (2018). This new – and ongoing – wave of globalization has seen international trade grow faster than ever before. The US is the world’s second-largest trader at 11.5 percent of … Trade transactions include both goods (tangible products that are physically shipped) and services (intangible commodities, such as tourism and financial services). America's share of the global export market is declining, and world trade is at its "worst performance in nearly a decade." (NB. Available online here. Differences in underlying records: is trade measured from National Accounts data rather than directly from custom or tax records? The openness index, when calculated for the world as a whole, includes double-counting of transactions: When country A sells goods to country B, this shows up in the data both as an import (B imports from A) and as an export (A sells to B). Three important sources are: In the visualization here we provide a comparison of the data published by several of the sources listed above, country by country, since 1955 up until today. We discuss this in more detail below.). w12927). U.S. Equity Views in a Global Context. “That it is logically true need not be argued before a mathematician; that is is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them.” (NB. The graph here shows the price changes of the key tradable goods after the opening up to trade. Regarding levels, as one would expect, in high income countries food still accounts for a much smaller share of merchandise exports than in most low- and middle-income-countries. London-based data visualisation studio Kiln, The Economy: Economics for a Changing World, welfare gains from increased product variety, they benefit differently from changes in relative prices, trade is not a major driver of income inequalities, Here is the same chart but showing imports, produce more than a couple of decades ago, Here is the same chart, but showing imports, World Investment Report 2018 – Investment and New Industrial Policies, slowdown in the rate of growth of trade in goods and services, relative to global GDP, Here is a stacked area chart showing the total composition of exports by partnership, NBER-United Nations Trade Dataset Project, CEPII Bilateral Trade and Gravity Data Project, International Merchandise Trade Statistics Manual, Balance of Payments and International Investment Position Manual, System of National Accounts of the United Nations. Yet many countries stick to FOB values only for exports, and use CIF values for imports (CIF stands for ‘Cost, Insurance and Freight’, and includes the costs of transportation).40. SDG Sustainable Development Goal target 17.11 aims to significantly increase the exports of developing countries, and in particular with a view to doubling the LDC’s share in global exports by 2020. The settings tab allows you to choose alternative product classes, trade flows choices, and the level of product aggregation. This page provides values for Balance of Trade reported in several countries. The increase in intra-industry between rich countries seems paradoxical under the light of comparative advantage, because in recent decades we have seen convergence in key factors, such as human capital, across these countries. The interactive chart here, from The Atlas of Economic Complexity, at the Centre for International Development in the Harvard Kennedy School, shows a breakdown of the United Kingdom’s total merchandise and service exports by product category, for 2018. Using Survey Data to Assess the Distributional Effects of Trade Policy. Source: Bloomberg Economics. Manuals, guides, and other material on statistical practices at the IMF, in member countries, and of the statistical community at large are also available. Here is an overview of the main points we cover below. The second wave started after the Second World War, and is still continuing. Rothwell’s critique received some attention from the media, but Autor and coauthors provided a reply, which I think successfully refutes this claim. The indicators in this chart are indexed, so they show changes relative to the levels of integration observed in 1900. ’. In particular, workers who lose their job can be affected for extended periods of time, so the positive effect via lower prices is not enough to compensate them for the reduction in earnings. Merchandise trade statistics data for By Country (BY-COUNTRY) exports, Export Share in Total Products in % to World (WLD) for years 1988 to 2018 But what about trade relative to total economic output? Here we explain how international trade data is collected and processed, and why there are such large discrepancies. In the third step, adjusted data are balanced using a “Symmetry Index” that weights exports and imports. “Credit constraints, heterogeneous firms, and international trade.” The Review of Economic Studies 80.2 (2013): 711-744. This is not surprising: most countries today produce more than a couple of decades ago; and at the same time they trade more of what they produce. The IMF’s DOTS dataset, for example, uses a 6 percent rule for converting import valuations (in CIF) into export values (in FOB).

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