The Structure and Growth of International Trade

We use a model of proportionate growth to describe the dynamics of international trade flows. We provide an explanation to the fact that the extensive margin of trade account for a large fraction of the greater exports of large economies, as well as for a number of stylized facts described by the literature on trade networks such as the power-law distribution of connectivity and the fat tails displayed by the distribution of the growth rates of trade flows. Hence, such a simple setup is able to capture the dynamics of very different economic variables, from firm size (as shown in the industrial organization literature) to international trade flows (as documented here). Furthermore, we provide an additional element to the discussion on the relative ability of different international trade models to adequately match empirical regularities. JEL Codes: F31, F33, F42.