Working Paper: CEPR ID: DP11128
Authors: Giovanni Federico; Antonio Tena Junguito
Abstract: This paper compares the wave of globalization before the outbreak of the Great Recession in 2007 with its alleged historical antecedent before the outbreak of World War One. We describe trends in trade and openness, estimate the gains from trade and investigate the proximate causes of the growth of openness. We argue that the conventional wisdom has to be revised. The first wave of globalization started around 1820 and culminated around 1870. In the next century, trade continued to grow, with the exception of the Great Depression, but openness and gains fluctuated widely. Growth resumed in the early 1970s. By 2007, the world was more open than a century earlier and its inhabitants gained from trade substantially more than their ancestors did. The current wave of globalization, in spite of some similarities with previous trends, has no historical antecedents.
Keywords: trade; openness; welfare; gains
JEL Codes: F14; F43; N70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| first wave of globalization (F69) | trade growth (F19) |
| trade growth (F19) | economic growth (O49) |
| openness (O36) | economic growth (O49) |
| economic downturns (F44) | fluctuations in openness (E32) |