Putting Things in Order: Patterns of Trade Dynamics and Macroeconomics

This paper develops a procedure to rank-order countries and commodities using disaggregated US imports data. It finds strong evidence that both countries and commodities can be ranked, consistent with the ‘product cycle’ hypothesis. Countries habitually begin to export goods to the United States according to an ordering; goods are also exported in order. We estimate these orderings using a semi-parametric methodology that takes account of the fact that most goods are not exported by most countries in the sample. The orderings seem sensible, robust and intuitive. For instance, the country rankings derived from disaggregated trade data turn out to be highly correlated with macroeconomic phenomena such as national productivity levels and growth rates.