What is a product anyway? Applying the Standard International Trade Classification (SITC) to historical data

Abstract

We study the Standard International Trade Classification (SITC). Thousands of studies rely on disaggregated trade data, but the quality of these studies’ unit of analysis—bins of goods categories arranged in certain hierarchies—is rarely studied. It is often unclear what a product or a variety really is. Meanwhile, increasingly granular trade data from before the 1950s are lifted from the archives that require standardization. The SITC provides a framework for that. We make four contributions: First, we work out the specificities of each SITC revision, analyze how revisions are related, and provide improved correspondence tables between all revisions. We show that revision choice can affect the analysis of historical trade data. Second, we propose basic rules for translating historical, unstandardized trade statistics to the SITC. Third, we translate German product-level trade data from the first globalization to both SITC revisions 2 and 4 in order to find out which revision may be more applicable to historical data. Fourth, we then develop metrics to quantitatively assess our translation exercise. We argue that despite inevitable imperfections, applying the SITC yields useful results, even on a very disaggregated level.