Essays in Honor of Mordechai Kreinin
Edited by Michael G. Plummer
James Cassing and Steven Husted 1. INTRODUCTION In 1979, Jimmy Carter was President of the United States, the Berlin Wall was intact, as was the Soviet Union, the Tokyo Round was not implemented and the Uruguay Round was a decade away. Between 1980 and 2000, about 125 free-trade arrangements were negotiated and implemented, the EU expanded twice and adopted a common currency, and there was a capital market disruption in 1997 of historic proportions involving the former Soviet Union and many countries of East Asia.1 Through all of this the world economy grew by more than 70 percent and world trade grew by a remarkable 175 percent. Yet, in this chapter we provide evidence that the pattern of international trade for many countries appears to have remained relatively stable: principal trading partners do not change, and trade shares exhibit remarkable constancy. This trade pattern stability over a long period of time is not what economists usually predict. For example, Yarbrough and Yarbrough (2000 p. 74) echo the intuition of many economists when they write in their popular textbook: The evolution of comparative advantage over time implies that production and trade patterns will change over time as well, creating changes in the distribution of income and some difficult dilemmas for policymakers. These changes are evident even over a fairly short period of time. But examination of the market for aggregate imports for almost 100 countries over the last two decades of the twentieth century calls this fluidity of trade patterns into...
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