What factors matter for trade at the global level? Testing five approaches to globalization,1820–2007

Abstract

This article uses a global-level dataset with information across nearly two centuries to explore the factors associated with the expansion of international trade. The results of the autoregressive conditional heteroskedasticity regressions show that trade since the early 1800s is strongly coupled with advancements in industrial technology and its ability to cut the cost of commodities transport. In addition, the spread of democracy and the geopolitical stability promoted by the hegemonic nation-state are additional factors that augment trade during the past two centuries. The findings also reveal that trade since the early 1900s is further enhanced by the growing membership base of the United Nations and the World Trade Organization, given their propensity to generate compatible national institutions and a uniform set of rules for cross-national commodities exchange. However, there is no support for the claim that advancements in communications technology or the expansion of international governmental organizations increases trade globalization.