Merchandise trade has become an increasingly important contributor to a country’s gross domestic product (GDP), particularly for developing countries. Before the global financial crisis hit in 2008, merchandise trade as a percent of GDP for low- and middle-income economies was 57 percent, about 5% higher than for high-income economies. This is very evident in Europe and Central Asia (ECA) where merchandise trade accounts for 73 percent of the developing region’s GDP. Many ECA countries including Hungary, Belarus, and Bulgaria have merchandise trade to GDP ratios above 100 percent (155, 136, and 114 percent respectively in 2011), meaning merchandise exports are a large contributor to their overall economy.
Between 2000 and 2011, merchandise exports between developing economies grew by more than 650 percent in current prices, while their merchandise exports to high-income economies grew by less than half that amount. By 2011, about 30 percent of total merchandise exports from developing countries went to other developing economies, while exports to high-income economies fell from 80 percent in 2000 to about 67 percent in 2011.
Let’s take a look at merchandise trade of two of the major exporters in the developing world, Brazil and China. Since 2010, Brazil’s merchandise exports to developing economies have nearly equaled those to high-income economies, largely due to Brazil’s increased natural resource exports to Asia, particularly to China. In addition, since 2009 Brazil has increased its intra-regional trade. These two factors have nearly leveled Brazil’s merchandise exports to developing economies and its merchandise exports to high-income economies.
Apart from an increase in merchandise trade with Brazil, China also plays a significant role as an exporter to developing economies. In 2009, China surpassed Germany as the world's largest merchandise exporter. According to Coates, et al., since the demand for China’s exports by advanced economies contracted during the global financial crisis, “export demand from emerging economies will play an increasingly important part in driving China’s export performance.” World Development Indicators data illustrates this trend: China’s merchandise exports to developing economies rose from 13 percent in 2000 to 25 percent in 2011, while merchandise exports to high-income economies fell from 87 percent to 75 percent during the same period. To explore data on trade and other indicators, access the World Development Indicators database from Open Data website.
Analysis cited from Coates, Brendan, et al., “China: Prospects for Export-Driven Growth.” Economic Roundup Issue 4 (2012). Web. 09 Jul. 2013. Data published in the World Development Indicators database. Key elements of this blog post were first published in WDI 2013, page 94.
- Merchandise trade (% of GDP)
- Merchandise exports to high-income economies (% of total merchandise exports)
- Merchandise exports to developing economies within region (% of total merchandise exports)
- Merchandise exports to developing economies outside region (% of total merchandise exports)
- Merchandise exports by the reporting economy, residual (% of total merchandise exports)