Changes in Global Trade Flows

Prior to the 1970s, global trade flows were dominated by three major poles, North America, Western Europe and Pacific Asia. A dichotomy was observed between developed and developing countries as raw materials were flowing north and finished goods were flowing south. This situation can mainly been explained by differences in levels of development as well as by a the domination of the majority of developing countries by colonial powers. From the 1970s, this situation changed as industrial development took place in many developing countries in Latin America (Mexico), Southeast Asia (Malaysia, Thailand, Indonesia) and East Asia (China, South Korea, Taiwan). Many industrial processes which initially took place in developed countries, were relocated in new locations offering lower production costs, namely because of cheaper labor. Consequently, global trade is now characterized by significant flows of merchandises from developing to developed countries.