Summary:
– Over the past 20-25 years, trade volume has increased nearly 3.5-fold, thanks to lower communication and transportation costs and the liberalization of trade within the framework of the WTO.
– Crises have slowed international trade, notably the Asian crisis of the 1990s and the internet bubble of the early 2000s.
– The new trade strategies of emerging countries have tended to lengthen the value chain, thereby increasing trade, although we have recently seen the opposite phenomenon due to recent changes in these strategies.
One of the most striking phenomena of the last 20-25 years has been the increase in trade between countries. In fact, trade volume has increased nearly 3.5-fold during this period (+240%). While international trade is an important component of global economic growth, it is worth looking at its evolution since 1991 in a context where economic globalization is having a major impact on trade policies and where trade dynamics are slowing down.
Firstly, world trade grew strongly in 1994 (+11%) after several years of relative stagnation. The increase was mainly due to an economic recovery in Europe after a particularly bad year in 1993.
This increase marked the beginning of a five-year period (1994-1998) during which international trade grew strongly (7% per year on average), thanks in particular to lower communication and transport costs and the liberalization of trade within the framework of the WTO (World Trade Organization), which was created in 1995. Added to this was the increase in the phenomenon of multinationals from industrialized countries relocating to emerging countries, as well as the proliferation of mergers and acquisitions between the two sides of the Atlantic.
In 1998, the crisis in emerging countries (particularly in Asia) led to a breakdown in trade dynamics. The outflow of capital (among other factors) from these countries plunged them into a severe recession. Several emerging countries then changed their economic strategy to become mercantilist, thereby accumulating foreign exchange reserves to enable them to cope with this type of situation.
Then, in 2000 and 2001, the dot-com bubble burst and China joined the WTO, marking the beginning of a new era in international trade. At the same time, emerging countries developed strategies based in particular on their low labor costs to attract multinationals to produce in their countries and then re-export all or part of this production to industrialized countries (led by Europe and the United States). As a result, value chains (all the steps involved in manufacturing a product) became longer, more fragmented, and more complex, requiring the involvement of several intermediaries and increased trade between countries, as the components of a single product crossed borders several times. In accounting terms, this phenomenon increases foreign trade figures, which rose by nearly 70% between 2000 and 2007. The 2008-2009 crisis then brought this momentum to a sudden halt with a sharp collapse in international trade.
Finally, the recovery in trade is part of a relative global economic recovery. The confirmation of the economic emergence of China and several other countries has led to an acceleration in wage costs in these countries. Combined with their move upmarket (increased quality and complexity of manufactured products), this has had the effect of reducing high value-added imports from these countries. As a result, production tends to be refocused by large continental areas, which shortens value chains and partly explains the slowdown in trade in recent years.
