Africa Leading the New Patterns of Growth

The old theories governing the way that countries produce and trade are being replaced. The pattern of trade is being transformed by increasingly sophisticated technology and innovations in transportation; and the topography of actors is shifting to reflect new poles of growth.

The Two Faces of International Commodity Trade

For decades, commodity trade has been understood from the point of view of “commodity dependent” exporting countries, those whose revenues are largely generated by commodities exports. The trend of decreasing agricultural commodity prices was the focus of attention. However, from the beginning of the 2000s, there was an upward trend in agricultural commodity prices culminating in the price peak of 2007-08.

The World Needs More Trade to Contain the Slowdown

The global economy is facing strong headwinds that have set back world trade and output growth. Despite the measures implemented in many countries to contain the slowdown, production and employment trends continue to be negative. In the light of these developments, the World Trade Organisation (WTO) recently revised its forecast for world trade growth in 2012 to 2.5 percent, down from the previous 3.7 percent forecast. We foresee a volume of trade growth of 4.5 percent in 2013, below the long-term annual average of five to six percent that we have enjoyed for the last 20 years.

Multilateralism is at a Crossroads

Multilateralism is at a crossroads. This is a crucial matter for environmental and sustainability issues, as we have seen in the Rio+20 Summit, and for trade and other economic matters. The G20 Summit in Los Cabos, Mexico, focused precisely on improving our collective response to the current economic turbulence, which is at the heart of developments in the European Union (EU) as well.

THE FUTURE OF THE WORLD TRADING SYSTEM

The relative dynamism of emerging economies over the past several years has meant that these countries, many of them in Asia, have come to play an ever-growing role in the world and to account for a larger share of economic activity. Adjusting politically and organisationally to shifts in economic power takes time. As we work towards a new equilibrium in international cooperation, new relationships and leadership patterns will inevitably emerge, just as they have throughout history.

THE FUTURE OF THE WORLD TRADING SYSTEM

The relative dynamism of emerging economies over the past several years has meant that these countries, many of them in Asia, have come to play an ever-growing role in the world and to account for a larger share of economic activity. Adjusting politically and organisationally to shifts in economic power takes time. As we work towards a new equilibrium in international cooperation, new relationships and leadership patterns will inevitably emerge, just as they have throughout history.

THE MAIN PROBLEM WITH GLOBALISATION IS TOO LITTLE GOVERNANCE

Globalisation dominates our era, but it is an increasingly fragile dominance. Even as global integration delivers enormous benefits -growing wealth, spreading technology, the rise of billions of people in the developing world- it also creates new risks -financial instability, economic imbalances, environmental stresses, growing inequalities, cyber penetration- that we seem to have difficulty managing.

AFRICA: CORRECTING HISTORICAL INJUSTICES IN THE WORLD TRADE RULEBOOK

Why did Africa move from being a net exporter to a net importer of food in the 1980s when the prices of its key commodity exports tumbled and its agriculture slowed down? Its food trade deficit is now around USD 20 billion and, given the current rise in prices, could get much worse.

THE GORDIAN KNOT OF THE FOOD CRISIS

Barely out of the 2008 food price crisis, the world appears to have entered yet another phase of higher prices. Rising food prices are now stoking global inflation, not to mention political unrest of proportions that we could have seldom imagined.

THE GOOD SIDE OF GLOBALISATION

Is globalisation, which is shaping our societies whether we like it or not, a threat to identity? If we were to believe all that we hear, the winds of globalisation are wreaking havoc everywhere, uprooting identities and cultures which for centuries have been shaping human relations, sweeping away all local values and customs, writes Pascal Lamy, Director-General of the World Trade Organisation (WTO).

THE GOOD SIDE OF GLOBALISATION

Is globalisation, which is shaping our societies whether we like it or not, a threat to identity? If we were to believe all that we hear, the winds of globalisation are wreaking havoc everywhere, uprooting identities and cultures which for centuries have been shaping human relations, sweeping away all local values and customs.

THE CHANGING PATTERNS OF WORLD TRADE

The global trade landscape has changed profoundly in the past decade ­more profoundly, I suspect, than we fully understand. These changes are being driven partly by market opening, but mainly by transport, communications and information technologies. It now costs less to ship a container from Marseille to Shanghai ­half way around the world­ than to move it from Marseille to Avignon ­100 kilometres away. Multinationals routinely organize their activity around three “shifts” corresponding to the three main times zones ­Europe, North America and Asia­ and deliver on-line services, data inputting, software writing, help-lines ­from practically anywhere in the world.

AN URBAN LEGEND ABOUT INTERNATIONAL TRADE

Economists have long analysed trade, why nations need it to prosper, and what governments do to reap the gains while managing the costs. But if the economics of trade policy are clear, the politics of trade are highly complex. Trade policy, like so many other areas of policy, has ramifications on how resources are distributed, and this inevitably creates competing interest groups within society.

TRADE GOES HAND IN HAND WITH HUMAN RIGHTS.

The history of the relationship between trade and human rights is a history of suspicion, and to some extent of deliberate reciprocal ignorance. Yet, trade goes hand in hand with human rights. Trade presupposes human interaction, respect and understanding. If conducted with respect, "trade polishes and softens the most barbarous mores", to quote Montesquieu and his theory of "sweet trade".

YEAR ENDER – NOT YET OUT OF THE WOODS

In February of this year, the global economic downturn was peaking. The collapse of industrial output and exports was approaching a 40 percent year-on-year on average. Trade was shrinking dramatically. The outlook was indeed gloomy.

LOW-INTENSITY PROTECTIONISM, SO FAR

World economic growth, as measured by the world's production of goods and services, has slowed abruptly in 2008 and the early part of this year. The contraction in demand led to a slowdown in production, and in international trade. World merchandise trade is projected to fall by a full 10 per cent this year, and foreign direct investment, which fell by 15 per cent in 2008, is projected to drop further.

A MIXED PICTURE OF THE GLOBAL CRISIS

The world economy remains fragile and the economic outlook is still uncertain. There have been a few encouraging signs recently of better-than-expected performance here and there. Some are interpreting this as an indication that we may be turning the corner with regard to a possible return to previous patterns of economic growth, but excessive optimism is unwarranted.

WHY FREE TRADE IS THE BEST ROUTE TO FEEDING THE WORLD HUNGRY

While the world could probably agree on basic objectives for our agricultural systems -adequate, nutritious, and affordable food, decent pay for farmers, and culturally and environmentally-sensitive production - we still disagree on what global integration could bring to this process.

CONCERTED GLOBAL ACTION NECESSARY TO ADDRESS CURRENT CRISIS

Today we are experiencing the worst economic recession since World War II. No country is immune. Trade is shrinking, growth is declining, and unemployment is on the rise.

IN ECONOMIC CRISIS, THE POOR AND WEAK SUFFER MOST

In every economic crisis, it is the poor and weak who suffer most. Individuals without savings or a reliable source of income face the most difficulty in surviving sharp economic downturns. It is the same for countries. As the world braces for the worst economic recession since the 1930s, anxiety is on the rise, particularly in the developing world where poverty alleviation programmes hinge on securing open markets and development aid, writes Pascal Lamy, Director-General of the World Trade Organization (WTO) The World Bank\'s latest projection is that global economic growth for 2009 will be a mere 1%. Rich countries will see economic contraction of 0.1% while developing countries will continue to grow next year, albeit at an estimated reduced rate of 4%. The developing world constitutes about one-third of the world economy and as the sole source of growth in 2009 these countries will represent important markets for developed and developing country exporters alike. But the growth levels forecast for next year will not be achieved if countries close their markets and turn off the flow of development funds.