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Trade Collapse

June 9, 2009


The collapse in U.S. trade associated with the current downturn far exceeds the fall in any other post-war recession. It tracks the fall in trade observed in the 1930s, though there are now signs of stabilization. So far this collapse has been driven by economic factors, such as the decline in demand and trade financing, but as the world economy contracts the risk of protectionism increases.

CGS: Economic Cycle
Francois, Woerz: Trade and the Great Recession (
FT: World Trade
Teslik: Gloomy Portents for Global Trade
CFR Meeting: Global Trade-Implications of the Current Crisis

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  • Posted by Animesh Ghoshal

    While trade has indeed fallen much more dramatically than in earlier recessions, I suspect some of this apparently greater fall is due to the increase in vertical specialization. With different stages of production taking place in different countries, a product could cross a border several times before reaching its final use. Of course, the deeper recession also matters.

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