Post 2015: Global Action for an Inclusive and Sustainable Future

CHApTER SIx
Not only are
less developed
countries
expected to
account for a
growing share
of international
trade, but South–
South trade is
also expected
to increase
significantly.
Hence, greater
openness to
South–South
trade could
safeguard
growth in poorer
countries from
a possible
slowdown in
richer countries.
90
place to china and India. these trends could have
important implications for poor countries seeking
to identify export markets.
6.2.2 International trade
It is expected that international trade will continue
to grow in the near future, contributing to a more
globalised and integrated world economy. Despite
concerns about trade protectionism, especially
during the global economic crisis, a repeat of the
1930s appears unlikely. Even if greater protectionism
is averted, however, domestic policies could have
a significant impact on global demand for goods
and services. For instance, fiscal austerity in highly
indebted oEcD countries is expected to depress
imports, in other words it will reduce demand for
exports from existing trading partners.
Several studies suggest that world trade will
increase in the medium term. For instance, the
World bank (2011) forecasts that it will increase
from 49.9% of output in 2010 to 53.6% in 2025.
moreover, while world exports as a share of GDp
increased from 17% in 1990 to 26% in 2010, these
are expected to reach 33% by 2030 (rbSc, 2012).
this implies that world exports will grow faster
than global GDp, although probably at a slower pace
than in the past 20 years. 64
Industrialised countries are expected to account
for only 27% of global exports by 2030, compared
to the current 47% (rbSc, 2012). this projection
partly reflects the large expansion of asia’s middle
class, which also contributes to deeper regional
integration. asia’s world export share is projected
to reach 30% by 2023, thus surpassing the Eu as the
world export leader. of this, china is expected to
account for 14% of global exports by 2030, and India
for 6.4%. by then, china will lead the two major
international trade corridors with Europe and
other parts of asia – 11% and 10% of interregional
trade respectively (rbSc, 2012). moreover, china
EuropEan rEport on DEvElopmEnt 2013
and India are projected to become the main global
suppliers of manufactured goods and services,
while brazil and russia will lead in the supply of
raw materials.
not only are less developed countries expected to
account for a growing share of international trade,
but South–South trade is also expected to increase
significantly. a recent study estimates that the share
of South–South trade in global trade will increase
from 12.8% to 26.5% in 2030, and slightly more
under alternative scenarios – e.g. slower growth in
developed countries, further trade liberalisation,
or a slowdown in productivity growth in primary
industries (anderson and Strutt, 2011). Hence,
greater openness to South–South trade (e.g. to the
level of South–north trade) could safeguard growth
in poorer countries from a possible slowdown in
richer countries. moreover, regional agreements
(e.g. among aSEan countries) could provide
significant benefits, possibly even larger than
a multilateral trade agreement under the Doha
Development round (anderson and Strutt, 2011)
With regard to the (perhaps unlikely) possibility
of a ‘deglobalisation’ scenario – i.e. reduced trade
interdependence, capital flows, and migration –
Hillebrand (2010b) argues that this would bring
few benefits. For instance, while declining imports
could lead to improved equity in developing
countries, this might be at the cost of lower incomes.
6.2.3 Capital flows
International investment is intrinsically linked to
current account trends, which in turn depend on
future trade patterns. major emerging markets
are projected to increase their external (net) assets
by more than $15 trillion between 2010 and 2025,
while advanced economies will experience a fast
deterioration of their investment positions (World
bank, 2011). However, it should be noted that
these trends are mainly driven by china’s asset
64 over the past few decades, the increase in global trade flows has been mainly due to the growing fragmentation of production processes rather
than a significant boost in value added.