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Trends in World Trade in Durable Consumer Goods

Published online by Cambridge University Press:  26 March 2020

A. Maizels ,
R. W. Thomas  and
L. Boross
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Extract

In general the importance of consumer goods in world trade is declining. But this is not true of durable consumer goods. From 1937 to 1950 this group held its share of total trade in manufactured goods at about 7 per cent; from 1950 to 1957 the figure rose to 8 per cent; and in 1958—mainly because of the sharp rise in shipments of cars from Europe to the United States—it went up to nearly 9 per cent (table 9).

Type
Research Article
Information
National Institute Economic Review , Volume 6 , November 1959 , pp. 15 - 36
Copyright
Copyright © 1959 National Institute of Economic and Social Research

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References

note (1) page 15 The term is used here to cover passenger road vehicles— passenger cars, motor cycles and bicycles-and those house hold durables produced by the metal and engineering industries. Books, jewellery, toys, boats, sports gear, glass ware, crockery, furniture, floor coverings and similar items- which might be included in a more comprehensive definition of durable consumer goods—are not included here. The figures for passenger road vehicles necessarily include those for business use.

note (2) page 15 Some use time series comparisons—comparing the increase in demand for a product over a number of years with the increase in incomes; others use family budget data— comparing the different amounts spent on a product at a, given time by persons in different income groups.

note (1) page 16 A recent calculation shows income-elasticities of demand for the periods 1929-41 and 1949-56 varying from 3.80 to 4.59 according to assumptions made (see D. B. Suits, ‘The Demand for New Automobiles in the United States 1929-1956’, Review of Economics and Statistics, vol. XL, no. 3, August 1958). Income-elasticities exceeding 2.0 have also been found by other investigators.

note (2) page 16 Economic Survey of Europe in 1958, ch. V, p.19. Several studies of family budget data and of time series have found that the demand for consumer durables tends to rise at least twice as fast as real income, other things being equal. See, for example, the articles by J. R. N. Stone and D. A. Rowe, ‘Dynamic Demand Functions : Some Econometric Results’, Economic Journal, LXVIII, June 1958; and J. Aitchison and J. A. C. Brown, ‘A Synthesis of Engel Curve Theory’, Review of Economic Studies, XXII (1), no. 57, 1955.

note (1) page 20 Demand for new durables must depend on the existing stock as well as on the income level (which affects the desired stock) and relative prices. Thus, the change in demand for new durables in a given year may be influenced by whether demand was high or low in previous years, as well as by the income change in the current year and the expected income change in the succeeding year.

note (2) page 20 Real income of the various countries was estimated in United States dollars on the basis of approximate purchasing power parity rates of exchange in 1955.

note (3) page 20 See Economic Survey of Europe in 1958, Geneva, United Nations, ch. V, pp 21-23.

note (1) page 23 The ownership elasticity with respect to income will approximate to the corresponding demand elasticity only if (a) replacement demand is small in each country (or is the same proportion of the total stock); (b) ownership elasticity is the same in all countries at given levels of income; and (c) the rate of growth in real income is the same everywhere. Though the first two conditions may be approximately true, the third will not hold. However, it is unlikely that variations in growth rates are systematically related to per capita income levels, so that this factor would not seriously distort the relationship between the average ownership and income elasticities.

note (2) page 23 The relative importance of home and export demand since the early 1950s is discussed in greater detail at the end of this article.

note (1) page 26 There may, of course, be some production carried on though not officially recorded.

note (2) page 26 Since purchase tax is chargeable on the value of imports including the duty, the effective rate of protection for home- produced cars is 45 per cent.

note (1) page 29 As from November 1959, the United Kingdom abolished import restrictions on United States cars.

note (2) page 29 A small part of the decline in the United States share of world exports since 1950 is explained by the substantial increase in its imports of cars during this period. This automatically reduces its share and increases that of other countries. But even if all exports of passenger road vehicles to the United States are excluded from the world total the United States share still shows a fall from 23.0 per cent in 1950 to 17.9 per cent in 1957 and 14.8 per cent in 1958.

note (1) page 32 Taking these as the countries listed in table 22, plus Norway.

note (1) page 33 In Britain, television reception is based on 405-line definition, while on the Continent, apart from France, 625- line definition is standard. France uses 819-line, while the United States uses 525-line, as does the rest of the American Continent and most countries in the Middle East.