According to the IMF’s Direction of Trade Statistics database in 2016 the world imported US$339 billion more than it exported. Mr. Alejandro Jara, former Deputy-Director General, WTO, has stated that the concept of comparative advantage in final goods, is no longer fully relevant to explain trade between countries. Today, international specialization relates to trade in tasks rather than in finished goods, with the result that trade in intermediate goods, such as components, parts or goods for further processing, has grown fast. Trade data as available is not measuring truly the inter-connectivity of national economies which needs high frequency trade data but also through linking firm activity (production) with export activity (trade). The solution might not be the collection of more data, but to operate a paradigm shift in their packaging and interpretation.
Why Trade Data is Important?
Politicians use official trade data in the form of the size and trend of balance of payments deficits and surpluses between countries to complain about unfair trading practices and manipulated currencies. They threaten trade wars and retaliatory actions on the basis of misleading, inaccurate and misinterpreted statistics. In particular, politicians in the United States focus on the country’s trade on the balance of trade between the US and the rest of the world in terms of merchandise trade – physical goods and commodities. The trade disputes sparked of by the Trump administration against China and the European Union have been based on a perception that a large bi-lateral merchandise trade surplus between another country and the United States is prima facie evidence that the country is employing unfair trade practices or is manipulating its currency.
The emphasis on such bilateral trade data and le