south-south trade

South-South Trade

Trade between developing countries, specifically Low Income Developing Countries (LIDCs) and Emerging Developing Countries (EDCs) or the 'Global South'.

BRICS

An association of five major emerging economies: Brazil, Russia, India, China, and South Africa that are significant drivers of economic growth in South-South trade.

Total value of South-South trade in 2019

US$5.5 trillion.

Reasons for growth in South-South trade

Factors include rising demand for raw materials in China and India, a large potential customer market, increasing demand from a growing middle class, intra-regional trade, growth in FDI, and MNCs aiming to reduce labor costs.

Factors holding back some countries in South-South trade

Low productive capacity, limited economic diversification, price fluctuations of primary products, poor infrastructure, poor governance, and being landlocked.

Growth of service industry

Trade in commercial services grew more rapidly than merchandise trade, with a 6% increase in 2013 compared to a 2% increase in merchandise.

New International Division of Labor (NIDL)

The global reorganization of production over the last 40 years, involving MNCs relocating manufacturing to EDCs/LIDCs while keeping high-paid managerial jobs in developed countries.

Impact of MNCs on South-South Trade

MNCs contribute to the movement of jobs from Advanced Countries (ACs) to EDCs and LIDCs due to lower labor costs and weaker regulations.

Growth in travel services

Increased tourism to new destinations in LIDCs and EDCs has contributed significantly to the growth of the commercial services sector.

Europe's share in service export in 2019

Europe accounted for 47% of global service exports, although its share has been declining.