The Transformation of World Trade

{
  "authors": [
    "Uri Dadush",
    "Shimelse Ali"
  ],
  "type": "other",
  "centerAffiliationAll": "",
  "centers": [
    "Carnegie Endowment for International Peace"
  ],
  "collections": [],
  "englishNewsletterAll": "",
  "nonEnglishNewsletterAll": "",
  "primaryCenter": "Carnegie Endowment for International Peace",
  "programAffiliation": "",
  "programs": [],
  "projects": [],
  "regions": [
    "North America"
  ],
  "topics": [
    "Economy",
    "Trade"
  ]
}

Other

The Transformation of World Trade

Developing countries already play a substantial role in world trade, and their significance is only expected to rise. As they diversify and grow as export markets, emerging economies will come to dominate international trade.

By Uri Dadush and Shimelse Ali

Published on Apr 21, 2010

Developing countries are growing rapidly, and long term projections suggest that their rising economic weight will transform world trade. As these emerging economies diversify and become increasingly important export markets, they will come to dominate international trade.

Key Conclusions

This phenomenon is characterized by three trends in developing countries: the diversification of exports into a wide range of manufactures, the emergence of a large Global Middle and Rich (GMR) class, and increased financial integration.

As wages, education levels, and ratios of capital to labor in the most successful developing countries rise closer to those of advanced economies and faster than those in the less successful ones, existing patterns of comparative advantage will be redrawn.

The transformation of world trade will present new challenges and opportunities. In order to reap the new opportunities, the poorest and most commodity-dependent countries will need to make sustained efforts to improve their business climates. Advanced countries will also have to retain their edge in innovation and product differentiation.

While domestic reforms are key, international rules will have to be strengthened to make trade more open and predictable.

About the Authors

Uri Dadush

Former Senior Associate, International Economics Program

Dadush was a senior associate at the Carnegie Endowment for International Peace. He focuses on trends in the global economy and is currently tracking developments in the eurozone crisis.

Shimelse Ali

Economy Trade North America

Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.

More Work from Carnegie Endowment for International Peace

Collection
The Iran War’s Global Reach
As the war between the United States, Israel, and Iran continues, Carnegie scholars contribute cutting-edge analysis on the events of the war and their wide-reaching implications. From the impact on Iran and its immediate neighbors to the responses from Gulf states to fuel and fertilizer shortages caused by the effective shutdown of the Strait of Hormuz, the war is reshaping Middle East alliances and creating shockwaves around the world. Carnegie experts analyze it all.
Commentary
Emissary
“It’s Not Like Turning a Switch On and Off”
Why the Iran ceasefire isn’t a quick fix to the Strait of Hormuz energy crisis.
Helima Croft, Aaron David Miller
Commentary
Southeast Asia’s Agency Amid the New Oil Crisis
There is no better time for the countries of Southeast Asia to reconsider their energy security than during this latest crisis.
Gita Wirjawan
Commentary
Fuel Crisis Forces Politically Perilous Trade-Offs in Indonesia
As conflict in the Middle East drives up fuel costs across Asia, Indonesia faces difficult policy trade-offs over subsidies, inflation, and fiscal credibility. President Prabowo’s personalized governance style may make these hard choices even harder to navigate.
Sana Jaffrey
Commentary
Emissary
In Its Iran War Debate, Washington Has Lost the Plot in Asia
The United States ignores the region’s lived experience—and the tough political and social trade-offs the war has produced—at its peril.
Evan A. Feigenbaum

More Work from Carnegie Endowment for International Peace

A machine gun of a Houthi soldier mounted on a police vehicle next to a billboard depicting the U.S. president Donald Trump and Mohammed Bin Salman, the Crown Prince and Prime Minister of Saudi Arabia, during a protest staged to show support to Iran against the U.S.-Israel war on March 27, 2026 in Sana'a, Yemen.

Collection

The Iran War’s Global Reach

As the war between the United States, Israel, and Iran continues, Carnegie scholars contribute cutting-edge analysis on the events of the war and their wide-reaching implications. From the impact on Iran and its immediate neighbors to the responses from Gulf states to fuel and fertilizer shortages caused by the effective shutdown of the Strait of Hormuz, the war is reshaping Middle East alliances and creating shockwaves around the world. Carnegie experts analyze it all.

Map of Hormuz shipping traffic on a smartphone screen

Commentary

Emissary

“It’s Not Like Turning a Switch On and Off”

Why the Iran ceasefire isn’t a quick fix to the Strait of Hormuz energy crisis.

Helima Croft, Aaron David Miller

Commentary

Southeast Asia’s Agency Amid the New Oil Crisis

There is no better time for the countries of Southeast Asia to reconsider their energy security than during this latest crisis.

Gita Wirjawan

Commentary

Fuel Crisis Forces Politically Perilous Trade-Offs in Indonesia

As conflict in the Middle East drives up fuel costs across Asia, Indonesia faces difficult policy trade-offs over subsidies, inflation, and fiscal credibility. President Prabowo’s personalized governance style may make these hard choices even harder to navigate.

Sana Jaffrey

Commentary

Emissary

In Its Iran War Debate, Washington Has Lost the Plot in Asia

The United States ignores the region’s lived experience—and the tough political and social trade-offs the war has produced—at its peril.

Evan A. Feigenbaum