Economy / Foreign Trade / South-South Trade.
South-South Trade.
Definition:
- South-South trade refers to trade between developing countries.
Prominence and Growth:
- Historical Trends (1980s to the Current Decade):
- Volume of exports from the developing world increased nearly five-fold.
- Corresponding world growth figure amounted to a threefold rise.
- More than half of total exports from the South were accounted for by South-South trade flows.
- 2014 Figures:
- Value of South-South trade reached nearly USD 5.5 trillion.
- Comparable to the scale of North-North trade.
Factors Driving Higher Potential in South-South Trade:
- Higher Growth Performance and Future Growth Potential:
- Developing countries exhibit robust growth, with anticipated future growth.
- Greater Scope for Trade Liberalization:
- Import tariffs remain elevated in the developing world, providing room for trade liberalization.
- Greater Scope for Production Sharing:
- Similar levels of development and competitiveness allow for increased production sharing.
- Strong Complementarity:
- Complementarity in production and resource endowments between different segments of the developing world.
- Notable complementarity between BRICS economies and low-income countries.
Future Trends According to WTO:
- GDP growth in the developing world set to accelerate.
- Developing countries expected to exceed developed countries' growth trajectory in exports.
- Asia identified as the primary growth locomotive in terms of trade flows.
Role of BRICS Economies:
- BRICS economies contributing to the boost in South-South cooperation.
South-South trade, characterized by growth, complementarity, and increasing cooperation among developing countries, signifies a shift in global trade dynamics, with emerging economies playing a significant role in shaping international trade patterns.
