Major Trends In International Markets

Adriana Coba*
*Master of Science in International Business Development‘s candidate, University of Neuchâtel, Semester autumn of 2010.

Abstract; At the beginning of the 1950 the world trade was dominated by Europe and North America. Nowadays, Europe still
stays a leader, but North America lost its position in favor of other regions.

Most important changes over the last 5 decades:

International trade has propelled world economic growth for
the past 50 years due: the Progressive policy liberalization
(See Table 1), the falling transportation and communication
costs, the greater importance of developing countries and the
surge in the number, reach, and sophistication of
multinational businesses. About the first change, the past 20
years have seen the opening up of existing markets, with
national and regional governments lowering barriers to
trade, encouraged by the WTO. Developing countries
experience greater output growth from increased trade
openness, since they have more scope for upgrading their
industrial technology. The second important change, -
sometimes difficult to know what is cause and what is Figure 1: Example. W orld Gross Domestic Product (GDP) and
effect- is technology and connectivity. In Example, aviation: world merchandise exports move in tandem. Source: WTO
one of the most evident drivers and enablers of
globalization. Flow of air travelers has more than doubled in Industrialization: The rise of new economic powers has
the past 20 years. been driven by the structural transformation of their
economies, featured by the shift from primary production
The third change has been closely linked to the first two. (such mining, agriculture) to manufacturing and
This has been the emergence of new economic powerhouses, manufacturing from natural-resource-based to more
most notably China and India. technology-intensive activities, consequence of their
integration into world markets. The structure of
The fourth is the extraordinary surge in the number, reach, manufacturing production shows, since 1950 a strong raise
and sophistication of multinational businesses: Behind the in the value-added shares of industries producing
scenes, this process has involved profound experimentation information and communication technologies, transport
and innovation in relation to business models and supply equipment, and others, at expenses of other industries. Most
chains. Multinational corporations like BP, McDonald’s, and of the change occurred in the 1970s. Is important to mention
e-bay have exploded, also driven by financial groups, like that trade in intermediate goods has grown faster than in
HSBC, and logistics companies. Much of this commerce final goods and task-based production is seen as an
entails fragmentation of production between different opportunity for developing countries, to increase
locations, to take advantage of different cost structures and comparative advantages, as was the case of Chinese and
skills. Indian exports.

Table 1: Highlight historical events of the last 5 decades

1947 IMF begins operations. First signs of the Gatti.
1970s Computers, satellites and electronics alter production of
goods, services and patterns of capital movements.
1989 Berlin Wall falls: capitalism as dominant economic system.
1990s Begins the use of the term “globalization” ii
1991 Worldwide Web created
1992 Creation of the European Union.
1994 World Trade Organization (WTO) is created
2001 China and Taiwan join to WTO
2002 European Union launches the euro in cash.

Composition of world trade changing: There are many

variables that show the world trade changing, such as
Exports and imports, The proportion of trade, GDPiii
generated on every continent, Changes in trade volume per
capita and Trade balances of continents. Figure 1iv shows
one of these variables.
Upward trend of Service Sectorv: Since the 1970s service
sector has become dominant economic activity. This can be
explained by the decrease in relative prices of consumption
goods, in conjunction with the growth of demand for
services. Many services of importance for manufacturing
(such financial intermediation, sales and logistics) have
experienced productivity improvements because
industrialization needs and the diffusion of technologies.
But, in period 2000-10 the share of services in world
production has slightly shrunk, allowing a partial recovery
of industry and agriculture.
It can be explained in part, by the increases in the relative
prices of agricultural and mineral products) North America
is the only region where tertiarisation has continued arise the
whole period (Figure 3)
- “After Doha: Evolution or Revolution in the World
Trading System?” (2007). Annual meeting of the
Canadian Agricultural Trade Policy
- Kose, Ayhan and Otrok Christopher: “Understanding
The Evolution Of World Business Cycles” (2003).
International Monetary Fund; e-mail:
- “Trade And Develompent Report” (2005) United
Nations Conference On Trade And Development
i
General Agreement on Tariffs and Trade
ii
Trade and financial flows and movement of people and technology across
borders
iii
World Gross Domestic Product
iv
www.wto.org/english/res_e/statis_e/.../its09_highlights1_e.pdf
v
Also called “Tertiarisation”, “Outsourcing” or “de-industrialisation”

Regional shares of world value added: The economic

geography has changed, affecting relative contribution of the
main regions to global value added. Starting from total
production, the most important long-term changes are: Share
of Asia (grew from 15.5% to 28.5% between 1970 and
2008), at the expense of Europe and North America, whose
shares fell respectively from 40% to 33% and from 35% to
27%. Latin America and Oceania recorded marginal gains,
and the share of Africa remained low. The last period 2000-
08 has witnessed a fall of North America’s and Asian share
of world production, to the benefit of all the other regions,
like Europe: these trends are affected by changes in relative
prices and by fluctuations in nominal exchange rates that are
stronger than substitution effects on tradable products, but a
small contribution has come also from structural effects,
resulting from the relation between regional specialisation
patterns and changes in the sector distribution of world
production.

References
- “Raising Our Game:Can We Sustain Globalization?”
First Edition, (2007), Published by SustainAbility Ltd
- www.wto.org/english/res_e/statis_e/.../its09_highlights1
_e.pdf
- http://europa.eu.int/comm/economy_finance