DP160 | Patterns of World Trade in Manufactures: Does Trade Policy Matter?

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01/03/1987

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Abstract

This paper surveys the broad patterns of world trade in manufactures since about 1960. While the bulk of manufactured exports came initially from relatively few large industrial countries, developing countries have encroached seriously upon their markets in recent years. The newly industrialized countries have accounted for most of this competition, but a "second tier" of developing country exporters is growing up. The paper examines various explanations for the pattern of trade. Comparative advantage, based on factor endowments, appears to be the major determinant, although technical change may be modifying its effects. Trade policy was once important, but now probably has relatively little effect on the broad pattern of trade: tariffs are mostly low, and non-tariff barriers, while affecting particular flows significantly, are only just beginning to affect the broad patterns. Finally, Japanese trade in manufactures may be explained by comparative advantage. There is no need to appeal to alleged restrictive trade policies.