FRB: Why Hasn't Trade Grown Faster Than Income? Inter-Industry Trade Over the Past Century

International Finance Discussion Papers

Why Hasn't Trade Grown Faster Than Income? Inter-Industry Trade Over the Past Century
Joseph E. Gagnon and Andrew K. Rose
1990-371 (January 1990)

Abstract: Over the past century, the ratio of international trade to GDP has not grown substantially for most major OECD economies. We conjecture that growth in intra-industry trade has been offset by a decline in intra-industry trade. Inter-industry trade may have declined either because of biased growth in factor inputs so that factor proportions have become more similar, or because preferences have become more similar with rising per capita income.

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