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Four great Asian trade collapses.

Alan de Bromhead1, Alan Fernihough1, Markus Lampe2

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This study analyzes interwar Asian trade collapses using new bilateral import data. Declines occurred on the intensive margin, with price, not quantity, driving the collapse, differing from modern trade events.

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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.