Enlightened Economics

Economics for an Enlightened Age

• Has the Global Trade Engine Stalled? (Goods, perhaps. Services, maybe not)

Posted by Ron Robins on December 21, 2014

“For the first time in nearly half a century, trade between nations has grown slower than the global economy. Some economists believe trade may be at a peak, at least for a while. “Peak Trade” suggests the world could hit a long-term ceiling in terms of the effects of trade growth as an economic driver.”
— Has the Global Trade Engine Stalled? By Eric Justian, December 19, 2014, TriplePundit, U.S.A.

Commentary: Ron Robins
Buy local, make locally, is a major trend in all countries. The huge U.S. economic stimulus package of five years ago mandated domestic sourcing and production, wherever possible. In the U.S., as in many countries, there are large constituencies who see global trade as contributing to massive losses of high paying domestic jobs. Hence, like the U.S., countries around the world are emphasizing buy local, make locally.

Furthermore, renowned trends forecaster Gerald Celente of the Trends Research Institute predicts these trends growing globally together with an anti ‘made in China’ mindset among developed countries’ consumers.

Most of these trends likely apply mostly to the goods trade. But it remains to be seen if the services side of global trade is similarly constrained. My suspicion is that with the growth of the web and recently introduced simultaneous multi-lingual VOIP services such as Skype has inaugurated, services might yet see much further globalization. Services also constitute about 70% of global GDP.

For a more detailed understanding on the growth of the global services trade, read my post, Huge Migration of Service Jobs to Developing World Looming. That essay implies that over the long-term global trade in services — and due to lower cost structures particularly benefits the developing economies — could grow appreciably faster than world GDP.

From an Enlightened Economics perspective, the freer the trade, the better. There’s no better means to economic growth than for the ‘invisible hand’ of the market to function seamlessly and optimally.

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