Drivers of Global Trade: A Product-Level Investigation

Abstract

This paper investigates the drivers of global trade at the six-digit product level. The identification is achieved first by estimating the log-linear product-level bilateral trade implications of a model and second by aggregating the fitted estimation results across bilateral countries using Taylor series to obtain global measures in levels for each product. The empirical results suggest that supply-side effects (capturing production or exporting costs in source countries) contribute to changes in global trade more than six times the demand-side effects (capturing economic activity or preferences in destination countries) and more than ten times the effects of bilateral trade costs (capturing bilateral protectionism measures). Several product-level implications follow.

Keywords:

• Global trade
• product-level analysis
• decomposition

JEL Classifications:

• F14
• F60

Acknowledgments

The author would like to thank the editor Sunghyun Henry Kim and an anonymous referee for their helpful comments and suggestions. The usual disclaimer applies.

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1 The statistics given here are based on Table 1 of this paper.

Additional information

Notes on contributors

Hakan Yilmazkuday

Hakan Yilmazkuday is a professor of economics at Florida International University. His research focuses on international economics, regional economics, macroeconomics, together with growth and development.