Global Economic Crisis and Vertical Specialization in Developing Countries
The world has witnessed an impressive increase in trade over the past four decades. World merchandise trade increased from US$217 billion in 1962 to US$22.8 trillion in 2006. While industrialized countries accounted for the vast majority of this gr...
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| Format: | Brief |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2009/04/10536780/global-economic-crisis-vertical-specialization-developing-countries http://hdl.handle.net/10986/11121 |
| Summary: | The world has witnessed an impressive
increase in trade over the past four decades. World
merchandise trade increased from US$217 billion in 1962 to
US$22.8 trillion in 2006. While industrialized countries
accounted for the vast majority of this growth, between 1985
and 2006, developing countries' total trade increased
from US$1.1 trillion to US$8.4 trillion, growing at an
average annual rate of 9.8 percent, outpacing the world
trade growth of 8.7 percent over this period. As the current
economic and financial crisis unfolds, the world is now
witnessing a dramatic and unexpectedly rapid contraction of
trade, far beyond what would be expected in a typical
Keynesian-style contraction (Baldwin, 2009). Developing
countries are expected to be adversely affected as the
volume of world trade is expected to decline by more than 2
percent in 2009, the first such decline since 1982 (World
Bank, 2009). The emergence of vertical specialization has
allowed a large number of developing countries to exploit
their comparative advantages at a much finer level of
specialization in global production chains, enabling them to
both boost their exports and diversify away from
traditional, commodity-based exports. |
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