TRADE BLOCS, CURRENCY BLOCS AND THE REORIENTATION OF WORLD-TRADE IN THE 1930S

We analyze the impact of commercial and financial policies on the reor ientation of trade in the 1930s. We report evidence that commercial po licies attenuated prior connections between income growth and trade, a nd that exchange rate instability marginally discouraged international trade. In contrast, the tendency toward regionalization commonly ascr ibed to the formation of trade and currency blocs was already evident to a considerable extent prior to the regional policy initiatives of t he 1930s. This reorientation is more properly attributed to ongoing hi storical forces such as commercial and financial links between countri es forged over many years.