Source: WTO and World Bank.

World Merchandise Trade, 1960-2010

Global trade has grown both in absolute and relative terms, especially after 1990 where global exports surged in the wake of rapid industrialization in developing countries, particularly China. The value of global exports first exceeded $US 1 trillion in 1977 and by 2008, more than 16 trillion current US dollars of merchandises were exported. During the same time period, the share of the world GDP accounted by merchandise trade, imports and exports combined, surged from 18% to 52%. This trend is correlated with a growth in international transportation. Yet, this fast growth is skewed by the international division of production where parts can be traded several times before an assembled good is ready for final consumption.

The growth of exports is indicative of a diffusion cycle where globalization may have reached maturity, particularly in light of the acceleration phase that took place after 2001. This process cannot go on indefinitely as growth in trade was also accompanied by a surge in trade imbalances. The financial crisis of 2008-2009 was accompanied by a significant decline of global merchandise trade, close to 25% in just one year. The main factor behind this decline was a drop in the consumption of durable goods (e.g. furniture, appliances, cars) since consumers are able to postpone these type of purchases if they are uncertain about the future.

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