Four great Asian trade collapses

Area of Science:

• Economic History
• International Trade

Background:

• The interwar period (1919-1939) witnessed significant global economic disruptions, including trade collapses.
• Understanding historical trade patterns is crucial for contextualizing contemporary global economic events.

Purpose of the Study:

• To introduce a novel dataset of commodity-specific, bilateral import data for four major Asian economies during the interwar period.
• To analyze the characteristics and drivers of trade collapses in these economies.

Main Methods:

• Compilation of a new dataset on bilateral import data for China, Dutch East Indies, India, and Japan.
• Quantitative analysis of trade patterns, focusing on the intensive margin, commodity types, and price vs. quantity impacts.

Main Results:

• Interwar trade collapses in Asia shared some features with the post-2008 Great Trade Collapse but also differed significantly.
• Declines were concentrated on the intensive margin, with notable impacts on car imports and durable goods, except in industrializing China and India.
• Geographical imbalances characterized import declines, with prices playing a more dominant role than quantities in the overall collapse.

Conclusions:

• The interwar trade collapses in Asia present a unique case study distinct from modern trade events.
• Price dynamics were a primary driver of trade reduction, highlighting the importance of price transmission in historical trade disruptions.
• The varying impact on durable vs. non-durable goods suggests differing industrialization levels influenced trade resilience.