WTO working papers represent research in progress. They represent the personal opinions of individual staff members and/or external contributors, and are not meant to represent the position or opinions of the WTO or its members, nor the official position of any staff members. Any errors are the fault of the authors
Under various scenarios, including the possibility that countries will form large blocs (“mega-regionals”), trade among and outside these areas would be dominant, according to a WTO working paper released on 4 April 2014. And that would suggest that trade cooperation at the multilateral level remains crucial.
The paper also finds that a dynamic economic and open trade environment will be needed for new players to continue to emerge in the world economy, for South-South trade to intensify and for countries to diversify into skill-intensive activities.
The paper — by Lionel Fontagné of the University Paris 1 and CEPII (Centre d’Études Prospectives et d’Informations Internationales, the French research centre in international economics), Jean Fouré of CEPII and Alexander Keck of the WTO — says this means that the stakes for developing countries are particularly high.
Technological progress is likely to have the biggest impact, it says. Population changes will also play a part in future economic trends. For some countries, improving workers’ skills will be crucial; for others labour shortages may be addressed through migration, the paper says. And it adds that several developing countries would benefit from increased capital mobility; others will only diversify into more dynamic sectors when the costs of trade are further reduced.
The paper, “Simulating world trade in the decades ahead: driving forces and policy Implications”, uses the analytical techniques of linking a macroeconomic growth model and a sectoral computable general equilibrium (CGE) framework in order to project the world economy forward to 2035. It assesses to what extent current trends in trade are expected to continue and to what extent individual policy areas may matter for specific countries and regions.The paper is available here.