Trade in a changed world economy

Since the end of 1973, the world has been going through the downward phase of a long-term business cycle. From past experiences a reduction of the relative weight of international trade and a change in the structure of this trade from manufactures to primary products would be expected. Yet, this is not manifested in the present episode: the relative share of trade has increased during the last decade at the same rate as it had earlier, and no structural change is evident. This should be most probably attributed to the post-war international policy atmosphere. Absence of severely restrictive trade policies, combined with a regime of flexible exchange rates, have prevented the disruption of trade, both directly and indirectly, through the prevention of actual contraction of incomes during this phase.