[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-113032-en":3,"doc-seo-113032-105":29,"detail-sidebar-cat-0-en-105":90},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":4,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},113032,7971461741311,"Ophelia","https://ap-avatar.wpscdn.com/avatar/74000253aff267980c6?x-image-process=image/resize,m_fixed,w_180,h_180&k=1779345379180704826",8,"Research & Report","The Global Trade Slowdown - Cyclical or Structural - Research Paper","The paper analyzes why world trade has grown more slowly than income in recent decades, testing whether the slowdown is cyclical or structural. Using an error-correction empirical framework, it estimates the trade-income relationship over four decades and finds a sharp rise in long-term trade elasticity in the 1990s followed by a significant decline in the 2000s. Evidence indicates that structural change reflects a slowdown in international vertical specialization, accounting for roughly one-quarter to one-half of the import-growth decline from the 1990s to the 2000s.","Pub lic Disclosure Authorized Pub lic Disclosure Authorized  \nThe World Bank Economic Review, 34(1), 2020, 121–142 doi: 10.1093/wber/lhx027 Article  \nThe Global Trade Slowdown: Cyclical or Structural? Cristina Constantinescu, Aaditya Mattoo, and Michele Ruta  \nAbstract  \nThis paper focuses on the sluggish growth of world trade relative to income growth in recent years. We use a simple empirical strategy based on an error correction model to assess whether the global trade slowdown is structural or cyclical. An estimate of the relationship between trade and income in the past four decades reveals that the long-term trade elasticity rose sharply in the 1990s, but declined significantly in the 2000s, even before the global financial crisis. These results suggest that trade is growing slowly not only because of slow GDP growth, but also because of a structural change in the trade-GDP relationship in recent years. The available evidence suggests that a key driver of structural change over the 2000s is the slowing pace of international vertical specialization, which accounts for between one-quarter and one-half of the decline in import growth from the 1990s to the 2000s.  \nJEL classification: F14, F40  \nKeywords: Global Trade Slowdown, Trade Elasticity, Global Value Chains  \n1. Introduction  \nAfter bouncing back from the historic low of the Great Recession in 2010, world trade has grown on average by 3.0 percent since 2012, compared to the pre-crisis average of 7.1 percent (1987–2007) . This slowdown has received much attention and has been the subject of debate since it first appeared.1 One important question is whether the slower growth in trade simply reflects the sluggishness of GDP or whether there is a structural shift in the relationship between trade and GDP. Furthermore, if there is indeed a structural shift, is it a post-crisis phenomenon or does it reflect longer-term developments?  \nCristina Constantinescu is an economist in the Macroeconomics, Trade & Investment Global Practice at the World Bank; heremail address is [ineagu@worldbank.org. Aaditya Mattoo](ineagu@worldbank.org. Aaditya Mattoo) (corresponding author) is research manager of the Trade & International Integration Team of the World Bank’s Development Research Group; his email address is [amattoo@worldbank.org](amattoo@worldbank.org). Michele Ruta is lead economist in the Macroeconomics, Trade & Investment Global Practice at the World Bank; his email address [is mruta@worldbank.org. Research for](is mruta@worldbank.org. Research for) this paper has been supported by the World Bank’s Multi-Donor Trust Fund for Trade and Development and the Strategic Research Program. The authors are grateful for comments from seminar participants at the IMF, the World Bank, the 2014 Villa Mondragone International Economic Seminar, and the Third IMF/WB/WTO Trade Workshop, and to Tam Bayoumi, Chad Bown, Ruo Chen, Allen Dennis, Romain Duval, Hubert Escaith, Simon Evenett, Caroline Freund, Martin Kaufman, Ayhan Kose, Pascal Lamy, Alen Mulabdic, Franziska Ohnsorge, Alberto Osnago, Nina Pavcnik (the Editor), Mika Saito, Mohammed Saleh, Silvia Sgherri, Hans Timmer, and two anonymous referees for many useful suggestions. A supplementary online appendix for this article can be found at The World Bank Economic Review website.  \n1 Early discussions include, for example, Davies (2013) and Krugman (2013) .  \n© The Author(s) 2018 . Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK.  \nAll rights reserved. For permissions, please e-mail: [journals.permissions@oup.com](journals.permissions@oup.com)  \nDownloaded from [https://academic.oup.com/wber/article/34/1/121/5001659 by International Monetary Fund user on 23 June 2021](https://academic.oup.com/wber/article/34/1/121/5001659 by International Monetary Fund user on 23 June 2021)  \nWe use a simple empirical strategy based on an error correction model to address these quest","cbCaiiT20C0nEYfu","https://ap.wps.com/l/cbCaiiT20C0nEYfu","pdf",771137,1,22,"English","en",105,"# Introduction\n## Research questions and motivation\n# Empirical strategy and data\n## Trade-income relationship over time\n## Trade in goods versus services\n# Results on trade elasticity\n## Elasticity across decades and statistical tests\n## Elasticity by subperiods using quarterly data\n# Cyclical and structural decomposition\n## Crisis-driven cyclical effects\n## Structural decline in the 2000s","[{\"question\":\"What does the paper aim to determine about the global trade slowdown?\",\"answer\":\"It assesses whether the slower growth of world trade relative to income is mainly cyclical or driven by structural factors in the trade-GDP relationship.\"},{\"question\":\"How does the paper measure the trade-income relationship?\",\"answer\":\"It uses an error-correction empirical strategy and estimates the long-term elasticity of trade with respect to income over a long sample period.\"},{\"question\":\"What key factor does the paper identify for structural change in the 2000s?\",\"answer\":\"It points to a slower pace of international vertical specialization, which helps explain a substantial share of the decline in import growth from the 1990s to the 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