9/9/2019 Trade and Globalization - Our World in Data

This metric (the ratio of total trade, exports plus imports, to global GDP) is known as the ‘openness index’. The higher the
index, the higher the influence of trade transactions on global economic activity.7

As we can see, until 1800 there was a long period characterized by persistently low international trade – globally the index
never exceeded 10% before 1800. This then changed over the course of the 19th century, when technological advances
triggered a period of marked growth in world trade – the so-called ‘first wave of globalization’.

The first wave of globalization came to an end with the beginning of the First World War, when the decline of liberalism
and the rise of nationalism led to a slump in international trade. In the chart we see a large drop in the interwar period.

After the Second World War trade started growing again. This new – and ongoing – wave of globalization has seen
international trade grow faster than ever before. Today the sum of exports and imports across nations amounts to more than
50% of the value of total global output.

(NB. Klasing and Milionis (2014), which is one of the sources in the chart below, published an additional set of estimates
under an alternative specification. Similarly, for the period 1960-2015, the World Bank’s World Development Indicators
published an alternative set of estimates, which are similar but not identical to those included below from the Penn World
Tables (9.0). You find all these alternative overlapping sources in this comparison chart.)

Globalization over 5 centuries

Shown is the "trade openness index". This index is de ned as the sum of world exports and imports, divided by world
GDP. Each series corresponds to a different source.

60%
Penn World Tables (9.0)

50%

40%

30%

20%
Klasing and Milionis (2014)

10% Estevadeordal, Frantz, and Taylor

(2003) (upper bound)

Estevadeordal, Frantz, and Taylor

0% (2003) (lower bound)
1500 1600 1700 1800 1900 2014
Source: Penn World Tables 9.0, Estevadeordal, Frantz, and Taylor (2003), Klasing and Milionis (2014) CC BY

1500 2014 CHART DATA SOURCES

Before the rst wave of globalization, trade was driven mostly by colonialism

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