Export dynamism and market access

This paper undertakes a product-specific analysis of the evolution of world trade over the past two decades. It departs from the typical gravity model and uses statistical evidence to provide a first step towards a comprehensive product-specific examination of the factors that have driven the evolution of world trade at the 3-digit Standard International Trade Classification (SITC) level of aggregation, with a particular emphasis on the role of trade liberalisation. Special attention is paid to the cases of Brazil, Mexico, Korea and India.

Findings include:

• market access liberalisation has influenced product-specific growth of world exports and contributed to the shift in the structure of world exports of manufactures towards electrical and electronic goods (including parts and components), goods that require high R&D expenditures, and labour-intensive products such as clothing
• multilateral trade liberalisation has strongly improved market access conditions for manufactures and partly explains why manufactures have experienced particularly strong growth in exports
• the increased importance of vertical international production sharing and the associated preferential trading arrangements between geographically close countries with significantly different wage rates have been a key determinant of differences in export-value growth across individual manufactured products, as well as of the distribution of market shares for some of these products among developing countries
• projections based on a standard trade model suggest that moving to full trade liberalisation would lead to an increase in the share of agricultural products in total world trade by almost two percentage points and give greater weight to the textile, clothing and automotive sectors within manufactured exports

[adapted from author]