Patterns of World Trade in Manufactures: Does Trade Policy Matter

Abstract

This chapter surveys some of the broad patterns in world trade of manufactured goods over the last two or three decades. It discusses whether they arise from ‘natural’ economic phenomena — factor endowments and technological advance — or from conscious efforts on the parts of governments to control trade through policies such as tariffs and NTBs. While not denying the possibility that trade policy can be restrictive enough to matter, it concludes that, on the whole, factor endowments offer the principal explanation of what we observe. This is contrary to much popular discussion which implicitly attributes both apparently successful trade performance — such as Japan — and allegedly poor trade performances — such as the UK — to the respective determined single-mindedness and bumbling incompetence of the trade ministries involved.