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?
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.