Is the West really losing its grip on international trade?

Developing countries are capitalising on their competitive advantages in producing and exporting a wide range of goods including raw materials, consumer goods, energy and agriculture. With trade between developed countries rapidly increasing, the sheer number of developing countries exporting necessary goods to each other has made them less reliant on demand from wealthy developed countries.

More than 55% of South African metal and gem exports and 45% of OPEC’s crude oil exports now flow to emerging markets. The purchasing power of these countries is clearly increasing, and as they become less reliant on the wealthier West for a wide range of products, local standards of living may even improve quicker. 

But as emerging markets prosper and the middle class develops, surely demand for western products from wealthier nations will increase. The allure of a wealthier, Western lifestyle is still prominent in emerging markets. 

To that end, will Trump’s endless tirade against Chinese imports really have a significant impact? We at Polestar are big fans of trade, and by and large bringing the global community together. So much so that we work alongside our international partners for our clients when we see the benefits.

Twenty years ago, 62 percent of all bilateral trade was between just rich countries—namely the U.S., Canada and Europe—according to a Bloomberg analysis of UN Comtrade data where both trading partners are known. Now that share is down to 47 percent as developing countries become more prominent trading partners. The value of trade between emerging economies is up 10-fold during that period.

By Nischal Neupane on 06/06/2019