MALIYE DERGISI, ss.171-199, 2018 (ESCI İndekslerine Giren Dergi)
World trade has entered into a period of stagnation, with the global crisis of 2008, following the significant expansion during the 1990s and the first half of the 2000s. The aim of our study is to evaluate the reasons behind this structural transformation based on the existing literature. Recent studies identify three stylized facts: first, the estimated long run elasticity of world trade with respect to world GDP has decreased; second, the convergence of income between countries has slowed down, and finally, the importance of global value chains has diminished. This study critically assesses the importance of rapid technological advances in the slowdown of world trade. The connection between them has not attracted much attention in the literature. As a result, we emphasize that structural reasons behind the decline of the income elasticity of world trade since the 2000s indicate a long-term transformation. Among these structural reasons, the countries' localization of technology and gradual fall in vertical specialization play major roles.