Publication: Decomposing the Great Trade Collapse : Products, Prices, and Quantities in the 2008–2009 Crisis
Loading...
Published
2011-08-01
ISSN
Date
2012-03-19
Author(s)
Editor(s)
Abstract
The authors identifies a new set of stylized facts on the 2008-2009 trade collapse that they hope can be used to shed light on the importance of demand and supply-side factors in explaining the fall in trade. In particular, they decompose the fall in international trade into product entry and exit, price changes, and quantity changes for imports by Brazil, the European Union, Indonesia, and the United States. When the authors aggregate across all products, most of the countries analyzed experienced a decline in new products, a rise in product exit, and falls in quantity for product lines that continued to be traded. The evidence suggests that the intensive rather than extensive margin mattered the most, consistent with studies of other countries and previous recessionary periods. On average, quantities declined and prices fell. However, these average effects mask enormous differences across different products. Price declines were driven primarily by commodities. Within manufacturing, while most quantity changes were negative, in most cases price changes moved in the opposite direction. Consequently, within manufacturing, there is some evidence consistent with the hypothesis that supply side frictions played a role. For the United States, price increases were most significant in sectors which are typically credit constrained.
Link to Data Set
Citation
“Haddad, Mona; Harrison, Ann; Hausman, Catherine. 2011. Decomposing the Great Trade Collapse : Products, Prices, and Quantities in the 2008–2009 Crisis. Policy Research working paper ; no. WPS 5749. © World Bank. http://hdl.handle.net/10986/3511 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication South Africa’s Fragmented Cities: The Unequal Burden of Labor Market Frictions(Washington, DC: World Bank, 2026-01-08)Using high-resolution administrative, census, and satellite data, this paper shows that South African cities are characterized by spatial mismatches between where people live and where jobs are located, relative to 20 global peers. Areas within 5 kilometers of commercial centers have 9,300 fewer residents per square kilometer than expected, which is 60 percent below the global median. Poor, dense neighborhoods are most affected. In Johannesburg, a 10-percentile increase in distance from the nearest business hub corresponds to a 3.7-percentile drop in asset wealth (a proxy of household wellbeing) and 4.9-percentile drop in employment. In Cape Town, the declines are 4.0 and 3.7 percentiles, respectively. Employment is 87 percent lower in the poorest decile than the richest in Johannesburg and 61 percent lower in Cape Town. These findings suggest that South Africa’s spatial organization of people and economic activity constrains agglomeration and reinforces inequality. This methodology provides a scalable and standardized data-driven framework to analyze spatial accessibility and agglomeration frictions in complex, data-constrained urban systems.Publication The Evolution of Local Participatory Democracy in Nepal(Washington, DC: World Bank, 2025-11-05)Nepal is, according to its constitution, among the world’s most decentralized countries, with a long and complex tradition of local-level public participation. This paper traces the evolution of Nepal’s modern participatory institutions, examining the extent to which they are “induced” by external interventions versus being “organically” rooted in indigenous practices. The paper identifies three broad phases: an initial focus on participation in project implementation; a subsequent phase that expanded citizen engagement; and a third phase of citizen empowerment, culminating in the 2015 federal constitution, which granted unprecedented local autonomy. The analysis yields five key findings. First, over the past 50 years, successive reforms have progressively expanded opportunities for citizens to influence local decision-making. Second, these reforms have integrated traditional participatory mechanisms into formal institutions of local government. Third, although central-level initiatives exist, most participatory platforms continue to operate at the local level. Fourth, the federal constitution has created a new landscape of local democracy, embedding autonomy and accountability. Fifth, although they are still valued in many ethnic and territorial communities, traditional participatory practices are gradually disappearing. The paper concludes by offering policy recommendations to help donor agencies and governments strengthen Nepal’s democratic trajectory. It argues that effective interventions should build on Nepal’s deep participatory traditions while recognizing the constitutional reality of far-reaching local autonomy.Publication Institutional Capacity for Policy Implementation: An Analytical Framework(Washington, DC: World Bank, 2026-01-07)State capacity is an important prerequisite for policy implementation, yet at the country level it is difficult to measure, assess, and reform. This paper proposes a focus on institutional capacity: the ability of public institutions to implement the specific policy mandates for which they are responsible. Based on a review of existing literature, the paper defines the different dimensions that compose institutional capacity and groups them into two cross-cutting categories: organizational dimensions (personnel, financial resources, information systems, and management practices) and governance dimensions (transparency, independence, and accountability). The paper proposes measures for organizational and governance dimensions using existing data, shows intra-institutional variation of these measures within countries, and discusses how new data could be collected for better measurement of these concepts. Finally, the paper illustrates how the framework can be used to diagnose the sources of common problems related to weak policy implementation.Publication Closing the Gender Gap in Entrepreneurship: Overcoming Challenges in Law and Practice for Female Entrepreneurs(Washington, DC: World Bank, 2026-01-07)Despite significant strides toward gender equality, women around the world continue to encounter systemic obstacles that hinder their entrepreneurial success. This paper systematically reviews the literature on the barriers female entrepreneurs face and the solutions proposed to overcome these challenges. It discusses institutional factors, financial factors, human capital factors, and social and cultural factors. The literature overview is complemented by a series of stylized facts that illustrate how overcoming some of these existing barriers is correlated with improved women’s entrepreneurship and female labor force participation, drawing on the World Bank’s Women, Business and the Law database as well as the World Bank’s Enterprise Surveys. The findings underscore the need for creating an enabling environment where women can thrive as entrepreneurs.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Surprising Effects of the Great Recession : Losers and Winners in Thailand in 2008-2009(World Bank, Washington, DC, 2012-11)In 2009, buffeted by the great recession, Thai gross domestic product fell by 2.3 percent. Using monthly data from the socio-economic surveys of 2007-2010, this paper finds, after controlling for household variables, that real consumption per capita rose in 2009 relative to 2008 for most groups, including the poor, urban and rural households, men, women, and children. The losers were residents of Bangkok, especially those aged 20-29, and those working in sales and services. During the recession year of 2009, school enrollment rates did not fall, and durable goods purchases actually rose; households probably reduced their savings, and also benefitted from the lower food prices that prevailed in 2009. A simulation exercise based on the slowdown in growth of gross domestic product would have missed these effects, as would models based solely on readily-available data series. This points to the importance of country-specific policy analysis, rooted in timely local evidence, including household survey data.Publication Trade Finance during the Great Trade Collapse(World Bank, 2011-06-22)The bursting of the subprime mortgage market in the United States in 2008 and the ensuing global financial crisis were associated with a rapid decline in global trade. The extent of the trade collapse was unprecedented: trade flows fell at a faster rate than had been observed even in the early years of the great depression. G-20 leaders held their first crisis-related summit in November 2008. The goal was to understand the root causes of the global crisis and to reach consensus on actions to address its immediate effects. In the case of trade, a key question concerned the extent to which a drying up of trade finance caused the observed decline in trade flows. This book brings together a range of projects and studies undertaken by development institutions, export credit agencies, private bankers, and academics to shed light on the role of trade finance in the 2008-09 great trade collapse. It provides policy makers, analysts, and other interested parties with analyses and assessments of the role of governments and institutions in restoring trade finance markets. A deeper understanding of the complexity of trade finance remains critical as the world economy recovers and the supply of trade finance improves. The international community continues to know too little about the fragility of low income economies in response to trade finance developments and shocks, as well as about the ability and conditions of access to trade finance by small and medium enterprises and small banks in developing countries. Similarly, there is uncertainty regarding the impact on trade finance of recent changes in the third Basel regulatory framework.Publication From Global Collapse to Recovery(Washington, DC, 2010)The global crisis is now in the rear view mirror and world growth is being restored. In sharp contrast with past episodes of global turmoil, this time the recovery is led by the periphery, specifically by the larger and more dynamic emerging markets (Brazil, China, India, South Korea, Malaysia, Philippines, and Thailand). For this group of emerging markets (EMs), the contraction in economic activity was much smaller than that of rich countries, the recovery started earlier, and the rebound has been much steeper. Latin America and the Caribbean (LAC) are second among emerging regions, after Asia, in the strength of the recovery. The first part of the report focuses on macroeconomic and financial aspects, emphasizing the outlook going forward. Finally, the second part examines some aspects of the adjustment in labor markets during this crisis in comparison to previous ones.Publication Trade Finance during the 2008–9 Trade Collapse : Key Takeaways(World Bank, Washington, DC, 2011-09-01)Trade finance matters for trade, and when financial markets and world trade collapsed three years ago, a shortage in trade finance was hailed as a possible culprit. Because of the potential for global repercussions, world leaders called on the international community to act swiftly to avoid a depression. Governments and international institutions intervened to mitigate the impacts of the crisis. Then the economy bounced back, and trade picked up. But what did we learn from the crisis? In retrospect, what role did trade finance actually play? Did the freeze in the financial markets cause the unprecedented drop in global trade in 2008-9? This note presents evidence on the role of trade finance during 2008-9 and highlights a few takeaways on the data and knowledge gap of trade finance and government interventions during financial crises.Publication Thailand Economic Monitor, June 2010(Washington, DC, 2010-06)The Thai economy runs on a single engine: external demand. The economic roller coaster since the onset of the global financial crisis can be overwhelmingly attributed to fluctuations in the output of three sectors most sensitive to external demand: manufacturing, logistics (transportation and storage), and tourism (hotels and restaurants). As global trade contracted between the fourth quarter of 2008 and first quarter of 2009, Thailand's real gross domestic product (GDP) fell 6.3 percent, before rebounding 6.9 percent through the end of 2009 on a revival in actual and expected external demand. At the end of 2009, real GDP was back to pre-crisis levels, as measured in seasonally adjusted terms. For 2009 as a whole, however, real GDP fell 2.2 percent. The dominance of sectors linked to external demand over Thailand's growth dynamics is not new. Both sets of sectors grew at about the same pace prior to the 1997 financial crisis. However, a structural break took place in the aftermath of the crisis, when sectors linked to external demand grew an average of 6.1 percent between 2001 and 2007 compared to a 4.3 percent growth rate of other sectors. While the sectors linked to external demand are expected to grow below the historical average in the near term due to lower growth in demand from advanced economies, a reversal of the structural change observed since 1998 is unlikely. This will require an acceleration of the growth of the sectors linked to domestic demand. But the constraints that limited the growth of these sectors in the past not only remain but have been compounded in the near term by the escalation of the political conflict. This will ensure that growth rates in sectors linked to domestic demand will also remain below their (already low) historical averages and the dominance of external demand on the economy will continue to increase.
Users also downloaded
Showing related downloaded files
Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Health Information Systems in Yemen(Washington, DC: World Bank, 2024-04-03)There are multiple obstacles to use of health information systems (HISs) in Yemen, including fragmented systems, insufficient infrastructure, a lack of skilled personnel, and the absence of standardized registries with identical terminology and coding. The absence of unified strategic visions1 , standards, vocabulary, and terminologies further complicate the situation. Despite these challenges, Yemen has made strides in implementing various HIS with support from international partners, including the most widely used—the District Health Information Software 2 (DHIS2), for routine health data collection and analysis. However, it should be noted that the DHIS2 is not intended to serve as an electronic medical record (EMR) system in Yemen. This note underscores the potential of digital health solutions in transforming Yemen’s HIS. Introduction of a Digital Health Platform (DHP), designed to enhance the interoperability and integration of current and future HIS, is an opportunity for Yemen. The DHP helps improve data governance, management, and usage by encouraging the efficient use of digital health standards and open-source tools. A gradual, flexible, and demand-driven approach is encouraged, emphasizing the integration of existing HIS. Recognizing challenges and opportunities around HIS in Yemen, the Ministry of Public Health and Population (MoPHP) intends to effectively utilize digital solutions to foster greater improvements in HIS governance, architecture. The MoPHP intends to establisha foundational blueprint that can be synergized with the DHP and other proposed digitalhealth solutions, thereby accelerating the pace of implementation and ensuring a cohesiveapproach to health care transformation.Publication Citizen-centric Governance Indicators : Measuring and Monitoring Governance by Listening to the People and Not the Interest Groups(2010-01-01)Governance indicators are now widely used as tools for conducting development dialogue, allocating external assistance, and influencing foreign direct investment. This paper argues that available governance indicators are not suitable for these purposes as they do not conceptualize governance and fail to capture how citizens perceive the governance environment and outcomes in their countries. The paper attempts to fill this void by conceptualizing governance and implementing a uniform and consistent framework for measuring governance quality across countries and over time based on citizens' evaluations. Using data from the World Values Survey (and other sources) we implement this framework into practice and build citizen-centric governance indicators for 120 countries over the period 1994 to 2005.Publication Perceptions of Economic Mobility and Support for Education Reforms(Washington, DC: World Bank, 2024-11-12)This paper investigates the relationship between the expectations of economic mobility and support for tax-financed education reforms using data from the Life in Transition Survey, which covers 39 countries in Europe, Central Asia, and the Middle East and North Africa. The analysis demonstrates that individuals who expect themselves or their children to be upwardly mobile are more likely to support tax-financed education reforms. This correlation is robust to different formulations of mobility expectations and persists over a decade, encompassing both stable and post-crisis economic environments. The relationship is partially mediated by beliefs about the fairness of economic opportunities in society and individuals’ readiness to embrace risks.