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Cardiac Arrest or Dizzy Spell: Why is World Trade So Weak and What can Policy Do About It?

Author

Listed:
  • David Haugh

    (OECD)

  • Alexandre Kopoin

    (OECD)

  • Elena Rusticelli

    (OECD)

  • David Turner

    (OECD)

  • Richard Dutu

    (OECD)

Abstract

World trade growth was rapid in the two decades prior to the global financial crisis but has halved subsequently. There are both structural and cyclical reasons for the slowdown. A deceleration in the rate of trade liberalisation post 2000 was initially obscured by the ongoing expansion of global value chains and associated rapid emergence of China in the world economy. Post the financial crisis global value chains started to unwind and, possibly associated with this, Chinese and Asian trade weakened markedly. These structural changes were compounded by insipid demand due to anaemic growth of global investment, as well as intra-euro area trade, both of which are trade intensive. The slowdown in world trade growth post crisis, if sustained, will have serious consequences for the medium-term growth of productivity and living standards. Trade policy has significant potential to reinvigorate trade growth but the political environment for reforms is difficult, with a growing polarisation of OECD electorates into pro- and anti- globalisation supporters. Further trade and investment policy liberalisation should be introduced as part of a wider package of structural reforms to spread the benefits of freer trade and investment more widely. Arrêt cardiaque ou crise passagère : Pourquoi le commerce mondial est-il si faible et que peut faire la politique économique pour le relancer ? Le commerce mondial a cru rapidement au court des deux décennies qui ont précédé la crise financière de 2008. Mais sa croissance a été divisée par deux depuis. Des facteurs à la fois structurels et conjoncturels expliquent ce changement. Le ralentissement de la libéralisation du commerce mondial après 2000 a été masqué par l’expansion des chaines de valeur mondiale et l’insertion rapide de la Chine dans le commerce international. Après la crise, les chaines de valeur mondiale se sont détendues et le commerce Chinois et asiatique a ralenti, les deux phénomènes étant peut-être liés. Ces changements structurels ont été aggravés par une faible demande due à une croissance anémique de l’investissement international et du commerce intra-européen, les deux étant une source importante d’échanges commerciaux. S’il perdure, ce ralentissement de la croissance du commerce mondial aura des conséquences fâcheuses pour la croissance de la productivité et du niveau de vie. La politique commerciale dispose d’un potentiel pour relancer cette croissance, mais l’environnement politique actuel est peu favorable du fait d’une polarisation croissance au sein de l’électorat des pays de l’OCDE entre partisans de la globalisation et ceux plus sceptiques sur ses bienfaits. Une politique plus volontariste en matière de libéralisation des échanges et de l’investissement devrait être mise en place dans le cadre d’un plan global de reformes structurelles.

Suggested Citation

  • David Haugh & Alexandre Kopoin & Elena Rusticelli & David Turner & Richard Dutu, 2016. "Cardiac Arrest or Dizzy Spell: Why is World Trade So Weak and What can Policy Do About It?," OECD Economic Policy Papers 18, OECD Publishing.
    • Handle: RePEc:oec:ecoaab:18-en
    DOI: 10.1787/5jlr2h45q532-en
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    More about this item

    Keywords

    chaînes de valeur mondiales; Commerce mondial; global value chains; GVCs; politique commerciale; Ralentissement; Slowdown; trade policy; world trade;
    All these keywords.

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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