The subject of world trade and its evolution

How trade works

International trade flows along hugely complex supply chains between nations that source raw materials, to manufacturing countries that make and process them, and then on to consumer nations, which put the final products to use.
When trade is allowed to flourish, the nexus of supply routes, suppliers, processors and consumers behaves like a living thing. When change happens at any one link in the chain – say, when a miner of iron ore goes bust, or when the price of the metal suddenly rises – that will reverberate along the chain.
Change can come from a variety of stimuli. Fluctuating consumer demand for goods, technological innovations and new ways of moving products around the globe are among the most common.

The growing role of developing and emerging economies in world trade.

The rise of emerging markets

Over time, the nature of trade and the products carried will be markedly transformed, and that can have huge implications for national economies.
This is most strikingly seen in the economic rise of China. Once an impoverished nation, it is now the world’s second-largest economy and the largest outbound trader of goods, accounting for almost 15% of all exports, according to United Nations data.

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Emerging markets more broadly have also been steadily growing, as the chart above shows. The lower wages, plentiful land and accommodative governments found in these countries provide manufacturers with a source of low-cost production.
With unfinished goods, components and services now accounting for 70% of all trade, emerging markets such as the BRIICS countries – comprising Brazil, Russia, India, Indonesia, China and South Africa – are the largest beneficiaries of this development, their share of total global trade rocketing in recent years.