Understanding the New Global Economy

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Global trade

DOI: 10.4324/9781003057611-3

Cross-border trade has been growing faster than global production since 1870, leading to the present record level of trade integration, as measured by the increase in the trade-to-GDP ratio (Figure 3.1). There are, however, two notable interruptions: the inter-war period of de-globalisation and the cease of the trade integration process since the great financial crisis (GFC) of 2008–2009. Is the latter only a temporary standstill or are we entering the phase of a ‘new normal’? This chapter explores the key features of today’s trade, with a focus on global value chain trade, through the lens of modern trade theories. It highlights the implication of global trade for income (in-) equality across ...