Lessons from the trade blocks and trade wars
DAVID S. JACKS, Simon Fraser
University (SFU) - Department of Economics, National Bureau of Economic
Research (NBER)
Email: djacks@sfu.ca
DENNIS NOVY, University of Warwick - Department of Economics, Centre for Economic Policy Research (CEPR), Centre for Economic Performance (CEP), CESifo (Center for Economic Studies and Ifo Institute)
Email: d.novy@warwick.ac.uk
Email: djacks@sfu.ca
DENNIS NOVY, University of Warwick - Department of Economics, Centre for Economic Policy Research (CEPR), Centre for Economic Performance (CEP), CESifo (Center for Economic Studies and Ifo Institute)
Email: d.novy@warwick.ac.uk
What
precisely were the causes and consequences of the trade wars in the 1930s? Were
there perhaps deeper forces at work in reorienting global trade prior to the
outbreak of World War II? And what lessons may this particular historical
episode provide for the present day? To answer these questions, we distinguish
between long-run secular trends in the period from 1920 to 1939 related to the
formation of trade blocs (in particular, the British Commonwealth) and
short-run disruptions associated with the trade wars of the 1930s (in
particular, large and widespread declines in bilateral trade, the narrowing of
trade imbalances, and sharp drops in average traded distances). We argue that
the trade wars mainly served to intensify pre-existing efforts towards the formation
of trade blocs which dated from at least 1920. More speculatively, we argue
that the trade wars of the present day may serve a similar purpose as those in
the 1930s, that is, the intensification of China- and US-centric trade blocs.
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