The sectoral composition of global trade

Abstract

This thesis is an extension of recent research into the relationships between non-homothetic preferences and patterns of trade. The analysis focuses on the observed shift in consumption towards income-elastic services and, relative to agricultural goods, income-elastic manufactures associated with rising per capita incomes. In turn, the conjecture that we should witness a shift in global production and consequently a shift in trade away from primaries towards manufactured goods as the global economy develops is explored. This hypothesized change in the sectoral composition of global trade implies a change in individual country trade patterns. Specifically, the notion that a country’s exports must respond to a changing global market may help to clarify one of the principle causes of the shift towards manufacturing production among most small, trading economies.