Exports of Primary Agriculture and Processed Food by the EU decline due to Uruguay Round cuts in export subsidies. USC and EU shift toward more exports of Transportation Machinery and Equipment. Asian economies generally continue shift towards manufactures exports. Imports do not contract. Trade in intermediate inputs is very important.
Key inputs are macroeconomic forecasts.
In fact, this offers a microeconomic check on the feasibility and consequences of these forecasts. Of course the macro-forecasts are uncertain. This aspect can be incorporated into the projections using Gaussian Quadrature. Resul include mean changes in trade flows, production and welfare, as wel as standard deviations. This approach permits us to isolate the impact which China's growth has on other countries.