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The Global Financial Crisis and Its Impact on Trade: The World and the European Emerging Economies

Author

Listed:
  • Robert Shelburne

    (United Nations Economic Commission for Europe)

Abstract
This paper describes how the global financial crisis of 2007-2010 impacted trade both globally and more specifically for the European emerging economies, which in terms of GDP decline, were the most negatively impacted economies in the world. Just as with GDP, the trade of the European emerging economies was more severely impacted by the crisis than the trade for other regions of the world; exports for over one half of these economies declined by more than 50 per cent between the third quarter of 2008 and the first quarter of 2009. Despite these large declines, the geographical and sectoral distribution of their trade remained relatively stable. Most of these economies adjusted to the shock with a currency depreciation of about 20 per cent. The current account deficits of many of these economies which were quite large prior to the crisis were reduced significantly. Although there were some increases in protectionist measures and they did have a beggar-thy-neighbor component, in many cases these measures reflected macroeconomic policy failures, especially regarding the coordination of fiscal stimulus programs, and may have been welfare improving second best policies. The crisis is unlikely to result in major design changes in the world trading system, although the opposite is true for the world financial system.

Suggested Citation

  • Robert Shelburne, 2010. "The Global Financial Crisis and Its Impact on Trade: The World and the European Emerging Economies," ECE Discussion Papers Series 2010_2, UNECE.
    • Handle: RePEc:ece:dispap:2010_2
    as

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    File URL: http://www.unece.org/fileadmin/DAM/oes/disc_papers/ECE_DP_2010-2.pdf
    File Function: First version, 2010
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    References listed on IDEAS

    as
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    2. Robert Shelburne, 2009. "Current account deficits in the new member states: Causes and consequences," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 44(2), pages 90-95, March.
    3. Robert Shelburne, 2002. "Improving The Economic Performance Of The Global Economy," International Trade and Finance Association Conference Papers 1009, International Trade and Finance Association.
    4. Dang, Hai-Anh & Knack, Stephen & Rogers, F. Halsey, 2013. "International aid and financial crises in donor countries," European Journal of Political Economy, Elsevier, vol. 32(C), pages 232-250.
    5. Robert Shelburne, 2008. "Current Account Deficits in European Emerging Markets," International Trade and Finance Association Conference Papers 1130, International Trade and Finance Association.
    6. Auboin, Marc & Meier-Ewert, Moritz, 2003. "Improving the availability of trade finance during financial crises," WTO Discussion Papers 2, World Trade Organization (WTO), Economic Research and Statistics Division.
    7. Robert Shelburne & Oksana Pidufala, 2006. "Evolving Trade Patterns in the CIS: The Role of Manufacturing," International Trade and Finance Association Conference Papers 1078, International Trade and Finance Association.
    8. Robert Shelburne, 2008. "Financing Development in the UNECE Emerging Markets," UNECE Annual Report Economic Essays 2008_2, UNECE.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Evžen Kočenda & Karen Poghosyan, 2018. "Export Sophistication: A Dynamic Panel Data Approach," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(12), pages 2799-2814, September.
    2. Freddy Cepeda-López & Fredy Gamboa-Estrada & Carlos León & Hernán Rincón-Castro, 2019. "The evolution of world trade from 1995 to 2014: A network approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(4), pages 452-485, May.
    3. Bent, Peter H., 2020. "Recovery from financial crises in peripheral economies, 1870–1913," Explorations in Economic History, Elsevier, vol. 78(C).
    4. Huynh, Cong Minh & Hong, Thien Huong, 2022. "The multi-dimension of international logistics performance and export flows: An empirical study from developing countries," MPRA Paper 112444, University Library of Munich, Germany.
    5. Marianne Baxter, 2017. "Robust Determinants of Bilateral Trade," 2017 Meeting Papers 591, Society for Economic Dynamics.
    6. Silva, Thiago Christiano & Wilhelm, Paulo Victor Berri & Tabak, Benjamin Miranda, 2023. "The effect of interconnectivity on stock returns during the Global Financial Crisis," The North American Journal of Economics and Finance, Elsevier, vol. 67(C).
    7. Muhammad Ali Nasir & Mary Leung, 2021. "US trade deficit, a reality check: New evidence incorporating asymmetric and non‐linear effects of exchange rate dynamics," The World Economy, Wiley Blackwell, vol. 44(3), pages 818-836, March.
    8. Fabio Saracco & Riccardo Di Clemente & Andrea Gabrielli & Tiziano Squartini, 2015. "Detecting early signs of the 2007-2008 crisis in the world trade," Papers 1508.03533, arXiv.org, revised Jul 2016.
    9. Rossella Bardazzi & Leonardo Ghezzi, 2022. "Large-scale multinational shocks and international trade: a non-zero-sum game," Economic Systems Research, Taylor & Francis Journals, vol. 34(4), pages 383-409, October.
    10. Evžen Kočenda & Karen Poghosyan, 2018. "Export Sophistication: A Dynamic Panel Data Approach," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(12), pages 2799-2814, September.
    11. Magdalena Vlahova-Veleva, 2020. "The Euro‘s effect on trade," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 26-45,46-65.
    12. Evzen Kocenda & Karen Poghosyan, 2017. "Export sophistication: A dynamic panel data approach," Working Papers 980, Central Bank of the Republic of Armenia.
    13. My Duong & Mark J. Holmes & Anna Strutt & Steven Lim, 2019. "Effects of Trade Agreements and Foreign Direct Investment on Trade: Evidence from Vietnam," International Journal of Economics and Financial Issues, Econjournals, vol. 9(3), pages 116-126.
    14. Zhijie Guan & Jim Kwee Fat Ip Ping Sheong, 2020. "Determinants of bilateral trade between China and Africa: a gravity model approach," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(5), pages 1015-1038, April.

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    More about this item

    Keywords

    international trade; European emerging economies; financial crisis; transition economies; CIS; Russia; caucasus; central Asia; trade protectionism; current account deficits;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages

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