The changing structure of world trade

Flows of trade and investment around the world are changing size and direction rapidly. Developing countries have become much more important as hosts for direct foreign investment and as centres of global production of both goods and services.

Since the inception of the GATT, world GNP has risen from $1.3 trillion in 1960 to $29 trillion in 1997. Trade liberalization and expansion have underpinned this growth.

Between 1987 and 1997 world trade nearly doubled, and the ratio of trade to GDP in purchasing power parity dollars rose from 20.6 to 29.6 per cent .

Trade in services is growing even faster, assisted by rapid advances in telecommunications and IT. World service exports, which more than tripled from $392 billion in 1980 to $1.4 trillion in 1997, account for a quarter of world merchandise exports.

The developing countries share in world trade overall has increased from 20 to 25 per cent .

Merchandise trade

The strong gains in manufactures, from 10 per cent to 20 per cent , brought the share of developing countries in world exports of manufactures to 25 per cent in 1998, more than double the 1980 share and nearly triple the 1973 share. On current trends, the developing country share could exceed 50 per cent by the year 2020.

The pace of global integration has not been the same for all countries, however. Growth in real volumes of trade was below that of GDP in 44 of 93 developing countries in 1985–94, including many of the poorest. (WTO PRESS/128, April 1999)

World merchandise trade growth by selected region, 1990-98 (Annual per cent age change)

Imports

Exports

Average 1990-95	1996	1997	1998		Average 1990-95	1996	1997	1998
6.0	5.5	10.5	3.5	World	6.5	6.0	9.5	4.0
7.0	6.0	11.0	3.0	North AmericAa	7.0	5.5	13.0	10.5
8.0	11.0	11.0	6.5	Latin America	12.0	8.5	22.0	9.5
5.5	5.5	9.5	4.5	Western Europe	4.5	5.5	7.5	7.5
5.0	6.5	12.5	10.0	Transition economies	2.5	16.0	17.0	10.0
7.5	5.0	13.0	1.0	Asiab	10.5	6.0	6.0	-8.5

a Canada & United States.
b Chinese Taipei; Hong Kong, China; Malaysia; the Republic of Korea; Singapore and Thailand.
Note: Separate volume data are not available for Africa and the Middle East, although estimates for these regions have been made in order to calculate the world total.
Source: WTO

International prices of non-fuel commodities exported by developing countries, 1988-1998
(Annual per cent age change _a)

Year	Food	Tropical bev'gs	Vegetable oil-seeds and oils	Agric. raw materials.	Minerals and metals	Combined index		Export price of manufs.b	Real commod. prices c	Memo: crude petroleumd
						Dollar	SDR
1988	29.9	1.2	31.5	8.4	45.1	26.2	21.4	8.2	16.6	-19.7
1989	5.9	-14.6	-11.5	0.0	0.0	0.0	4.9	-1.1	1.1	21.6
1990	-6.2	-11.4	-12.9	4.7	-9.8	-5.9	-11.2	9.9	-14.4	28.6
1991	-6.6	-8.1	8.1	-0.7	-9.5	-6.3	-7.4	0.0	-6.3	-16.4
1992	-2.1	-14.0	7.5	-3.7	-3.7	-3.4	-5.7	3.0	-6.2	-1.0
1993	0.7	6.1	0.0	-6.2	-14.7	-3.5	-2.4	-5.8	2.5	-11.4
1994	10.1	75.0	24.4	15.7	12.7	18.0	13.6	2.1	15.6	-4.9
1995	5.9	1.1	10.3	15.0	20.2	9.9	4.3	11.1	-1.1	8.6
1996	6.8	-15.2	-4.2	-9.9	-12.1	-4.2	1.0	-3.6	-0.6	20.3
1997	-3.5	33.3	-0.9	-10.3	0.0	0.0	5.2	-7.5	8.2	-7.9
1998 e	-10.9	-15.6	8.4	-11.3	-17.1	-11.9	-9.2	1.0	-11.8	-32.0

Sources: UNCTAD, Monthly Commodity Price Bulletin, United Nations, Monthly Bulletin of Statistics and OPEC Statistical Bulletin.
a For quarterly data, quarter shown is compared to same quarter of previous year.
b Index of developed countries manufactured export prices (1990 base year).
c Combined index of dollar commodity prices deflated by manufactured export price index.
d OPEC basket of 7 crude oils.
e Three quarters only.
From: UNDESA and UNCTAD, 1998

The product composition of developing countries' merchandise exports has changed dramatically in the past decade.

• The share of manufactures in total exports has almost doubled to nearly two-thirds
• The share of mining products has fallen by more than half to less than one-quarter.

Merchandise exports of emerging markets by product category, 1997
(per cent age shares)

	Fuels	Metals and minerals	Agricultural products	Manufactures	Total
Middle East	73	2	4	21	100
Africa	44	8	19	29	100
Latin Americaa	19	11	36	34	100
Emerging Asiab	5	2	10	83	100
World	9	2	11	78	100

a Excluding Mexico.
bAsia, excluding Japan, Australia and New Zealand.
From WTO PRESS/128, April 1999

Commercial Services

The available data on trade in commercial services are incomplete.

It is, however, estimated that trade in services amounted to

• 17 per cent of the value of world trade in 1980
• 20 per cent in1990 ($US 0.8 trillion)
• 20 per cent in 1995, (US$1.2 trillion)

The services sector makes up an increasing share of output and trade for many developing countries. All developing regions, except Latin America, experienced a rise in the share of services trade in GDP in the period 1985-1995 (see table below).

Share of Services Trade in Total Trade and in GDP for Developing Regions
(per cent age)

Source: IMF, International Financial Statistics, various issues and World Bank, World Development Report, various issues

Developing country exports of services, however, are less important than might have been expected and even seem to have fallen as a proportion of total trade - although the volume of services exports had risen. This is most likely due to

• considerable liberalization in tariff and non-tariff barriers for traded goods
• comparatively tight restrictions on access to services markets