International Trade Theory
The article discusses the fears that some economists have about the slowing rate of growth seen in trade as it relates to the global GDP. In 1994 when trade barriers were lifted and the World Trade Organization was formed the percentage of trade relative to global GDP began to soar. It increased annually and reached its peak at 61% of total GDP for the world in 2011. ...view middle of the document...
Economists are trying to explain this slow down and find a solution.
Citigroup ran a recent report stating that since the economic crash of 2008 there has been an increase in protectionism globally that has slowed down international trade. This trend is making it more difficult for manufactured goods to be sold in different countries with different sets of standards. Another reason possibly to blame for this sudden halt is the fact that emerging economies are becoming a much larger part of the global discussion. In 1995-2007 59% of global economic growth came from advanced economies. However in 2010-2013 emerging markets took over and were responsible for 70% of global GDP growth. Negotiations between advanced economies is also aiding in the improvement of this trend. In 2014 China and America agreed on a deal to share information technology among willing members of the WTO. It should also be noted that not everybody sees this peak as a threat to the global economy. The growth of trade with GDP is not a natural law says Paul Krugman. Only time will tell if trade is in fact declining, however, with more barriers lifted, we should see an increase in supply chains and lift world trade far above this “peak”.