World Trade Organization Looks Back on 20 Years
In honor of its twentieth birthday, the World Trade Organization released on October 29 new editions of its key statistical publications: International Trade Statistics, Trade Profiles, World Tariff Profiles, and Services Profiles.
The four publications provide detailed breakdowns of the latest data on world trade by country. The publications are available online.
The International Trade Statistics publication also looks back at world trade from 1995 to the end of 2014 and discusses some of the most noteworthy trends over the past 20 years. Here are a few highlights.
General trends. Trade in goods and services has fluctuated significantly over the last 20 years. Up to the late 1990s, trade flows rose gradually. This was followed by a strong rise in the early 2000s and a sharp fall after the economic crisis in 2008. Recent years have seen a moderate recovery.
China’s accession to the WTO in December 2001 paved the way for its economic rise and contributed to increasing world trade from 2002 to 2008.
The impact of crises. Various crises had an impact on trade from 1995 to 2001. These included Mexico’s monetary crisis (1995-2001), the Asian financial crisis of 1997, and the bursting of the dotcom bubble in 2001. The latter two factors resulted in negative growth for merchandise trade in 1998 and 2001.
The 2008 financial crisis led to a global recession between 2008 and 2011. The volume of world exports plunged 12 per cent in 2009 while world gross domestic product dropped 2 per cent. Exports of goods rebounded in 2010, with a growth rate of 14 per cent in volume. However, the recovery was hampered by an increase in oil prices in 2010, partly as a consequence of political instability in oil-producing countries. From 2011 onwards, the European debt crisis weighed heavily on world trade growth.
Debt crises and geopolitical tensions intensified in 2014, causing world trade to slow to a crawl. In value terms, world merchandise trade growth averaged just one per cent per year from 2012 to 2014.
Trade in services. International trade in commercial services has been less volatile than merchandise trade, indicating greater resilience of services to global upheavals. Over the last two decades, world services trade has recorded negative annual growth only once (-9 per cent in 2009). In 2010, services trade resumed its pre-crisis level and has continued to expand steadily despite sluggish economic growth. Global exports of services increased by five per cent in 2014, compared with 0.5 per cent for goods.
Global value chains. The internationalization of production has led to increasingly global production networks or value chains. Between 1995 and 2011, most developed and developing countries significantly increased their contributions to global value chains (GVCs), resulting in a geographically more diverse manufacturing base. In 2011, nearly half of world trade in goods and services took place within GVCs, up from 36 per cent in 1995. The tendency of countries to specialize in particular stages of a good’s production, known as vertical specialization, brought about by foreign direct investment, has created new trade opportunities, especially for small developing countries and eastern European economies. As a result, world trade in intermediate goods has grown with the rise of vertical specialization.
East Asian economies have increased significantly the share of imported components in their exports. Some of these economies, including China, Korea, and Thailand, have benefited from investments in infrastructure and resources. The most prominent example is Cambodia, a least-developed country which increased its vertical specialization by 24 percent between 1995 and 2011, demonstrating how quickly integration into regional supply chains can take place.