TRADE – Securing positions in a volatile world trade system

How might international trade be affected by the ‘re-shoring’ of production to smart factories, rising wages in China, and the recently ratified African Continental Free Trade Agreement?

Chapter Contents:

Economic, technological and political change is reshaping the world trade order with implications for countries pursuing traditional export-led growth

  • Since the 2008 financial crisis, traditional globalisation has slowed.
  • The rapid advance of digital technology may soon incentivise the re-shoring of production to more developed countries.
  • The world trade order is also being reshaped by populist leaders and protectionist measures.

China’s move away from labour-intensive manufacturing could benefit African countries, but the window of opportunity may be small

  • China’s dominant share of the global trade in labour-intensive manufactured goods seems to be shrinking in response to rising domestic wages.
  • As China’s economy undergoes transition, African manufacturing could receive a boost. If just 1% of China’s apparel production relocated to Africa, the continent’s apparel exports would increase by almost 50%.

There is growing commitment to deepening intra-African trade

  • If the recently ratified African Continental Free Trade Agreement is fully implemented, the value of trade on the continent may increase by 15%–25% over the next two decades.
  • The East African Community has become Africa’s most integrated regional economic community and member states are embarking on ambitious regional infrastructure plans.