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How far has globalization gone? a tale of two regions

Author

Listed:
  • Rodolfo Campos

    (Banco de España)

  • Samuel Pienknagura

    (International Monetary Fund)

  • Jacopo Timini

    (Banco de España)

Abstract

We study the globalization of trade in Latin America and Asia over the past 25 years and quantify its economic impact. Employing structural gravity models, we first estimate a proxy of trade globalization that captures the ease of trading internationally with respect to trading domestically. The results indicate similar trade globalization patterns in the two regions, albeit with a high degree of heterogeneity within them. Trade globalization has been particularly strong in agriculture, mining and manufacturing, but has lagged in services. Within-region heterogeneity is associated with a set of trade policy instruments, including tariffs, non-tariff measures, WTO membership and trade agreements. Next, we quantify the economic implications of the estimated globalization trends. Simulations of a multi-sector trade model point to heterogeneous long-term impacts of globalization on GDP (some countries exhibiting substantial gains and others experiencing large losses), with no single sector playing a predominant role.

Suggested Citation

  • Rodolfo Campos & Samuel Pienknagura & Jacopo Timini, 2023. "How far has globalization gone? a tale of two regions," Working Papers 2329, Banco de España.
    • Handle: RePEc:bde:wpaper:2329
    DOI: https://doi.org/10.53479/34612
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    Keywords

    trade; globalization; structural gravity; Latin America; Asia;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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