Borders redrawn: Measuring the statistical creation of international trade

In this note we quantify how much the of the increase in the volume of international trade that took place since 1945 is due to the reclassification of within-country trade to international trade due to changes in national boundaries. We do so by imposing the territorial delimitations corresponding to 1946 to the current trade flow data, thus quantifying the volume of international trade that would not have been labeled international given national boundaries right after the end of World War II. Our results show that the effect of “boundary redrawing” corresponds roughly to 1% of the total volume of international trade. If colonial trade had been statistically considered to be within-country (within-empire) trade instead of international trade the independence of colonies would have raised this effect to approximately 3% of total trade.