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Abstract

If we look at the world from trade perspective we canfind below revolutionery changes that take place since beginning oftrade

Dramatic decreases in transport and communication costs havebeen the driving forces behind today’s global trading system.Geopolitics has also played a decisive role in advancing andreinforcing these structural trends.

In the last 30 years, world merchandise and commercial servicestrade have increased by about 7 per cent per year on average,reaching a peak of US$ 18 trillion and US$ 4 trillion respectivelyin 2011. When trade is measured in value-added terms, services playa larger role.

Between 1980 and 2011, developing economies raised their sharein world exports from 34 per cent to 47 per cent and their share inworld imports from 29 per cent to 42 per cent. Asia is playing anincreasing role in world trade.

For a number of decades, world trade has grown on average nearlytwice as fast as world production. This reflects the increasingprominence of international supply chains and hence the importanceof measuring trade in value-added terms.

Simulations show that in a dynamic economic and open tradeenvironment, developing countries are likely to outpace developedcountries in terms of both export and GDP growth by a factor of twoto three in future decades.

By contrast, their GDP would grow by less than half this rate ina pessimistic economic and protectionist scenario, and exportgrowth would be lower than in developed countries

“Golden age ofTrade”

In many ways, the world economy has undergone a process of“re-globalization” since the Second World War there is gradualchange in economic activity resuming and dramatically acceleratingthe integration path that was abruptly derailed by the First WorldWar.

Indeed, the world economy grew far faster between 1950 and 1973than it had done before 1914, and its geographical scope was farwider – ushering in a “golden age” of unprecedented prosperity.

World per capita GDP rose by nearly 3 per cent a year, and worldtrade by nearly 8 per cent a year. However, there is one importantdifference between the first and the second age ofglobalization.

During 19th-century version was accompanied by only limited tobasic principles efforts at international economic cooperation, the20th-century version, by explicit design, was built on a foundationof new multilateral economic institutions known collectively as theBretton Woods system:

The International Monetary Fund (IMF), the World Bank and theGeneral Agreement on Tariffs and Trade (GATT).

Formation ofGATT

Signed: 30 October 1947

Location: Geneva, Geneva Canton, Switzerland

The GATT was first discussed during the United NationsConference on Trade and Employment and was the outcome of thefailure of negotiating governments to create the InternationalTrade Organization (ITO). It was signed by 23 nations in Geneva on30 October 1947, and took effect on 1 January 1948.

The General Agreement on Tariffs and Trade(GATT) is a legal agreement between manycountries, whose overall purpose was to promote international tradeby reducing or eliminating trade barriers such astariffs or quotas.

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