DYNAMIC PERSISTENCE OF INDUSTRY TRADE BALANCES - HOW PERVASIVE IS THEPRODUCT CYCLE

This paper looks for dynamic patterns in international trade flows usi ng comprehensive multilateral data for six countries, disaggregated to the four-digit SITC level. The purpose of the paper is to compare pre dictions of persistent trade balances generated by theories of interna tional trade such as factor-proportions, with more dynamic theories su ch as the product cycle. Little evidence is found of dynamic trade beh avior at the industry level between 1962 and 1990 for Brazil, Japan, S outh Korea, Turkey, the United Kingdom, and the United States. Rather, goods that begin the sample in surplus (deficit) almost always remain in surplus (deficit) throughout the sample.