《The growth of world trade tariffs transport costs and》.pdfVIP

Journal of International Economics 53 (2001) 1–27 www.elsevier.nl/locate/econbase The growth of world trade: tariffs, transport costs, and income similarity Scott L. Baier, Jeffrey H. Bergstrand* Department of Finance and Business Economics, University of Notre Dame, Notre Dame, IN 46556-0399, USA Received 6 October 1997; accepted 9 November 1999 Abstract In the 25th anniversary issue of the Brookings Papers on Economic Activity, Paul Krugman [Krugman, P., 1995. Growing world trade: Causes and consequences. Brookings Papers on Economic Activity (1), 327–377] stated that the answer to the fundamental question ‘‘Why has world trade grown?’’ remains surprisingly disputed. He noted that journalistic discussion tends to view the growth of world trade as due to technology-led declines in transportation costs, while economists argue that policy-led multilateral and bilateral trade liberalization has spurred this growth. A third potential explanation raised by Elhanan Helpman [Helpman, E., 1987. Imperfect competition and international trade: Evidence from fourteen industrial countries. Journal of the Japanese and International Economies 1 (1) 62–81] and Hummels and Levinsohn (1995) [Hummels, D., Levinsohn, J., 1995. Monopolistic competition and international trade: Reconsidering the evidence. Quarterly Journal of Economics 110 (3) 799–836] is increased similarity of countries’ incomes. The purpose of this study is to disentangle from one another (and from income growth) the relative effects of