JETRO WHITE PAPER ON INTERNATIONAL TRADE 1998 

Japan External Trade Organization (JETRO)

2. Growing Contribution of Developing Countries to World Trade

On a nominal basis, trade in goods in developed countries grew at a lower level than world trade in 1997, with exports up 2.3% on the previous year to US$3.63 trillion and imports up 2.3% to US$3.62 trillion. Developing countries (including countries in transition), on the other hand, saw exports expand 5.8% to US$1.83 trillion and imports grow 8.0% to US$1.97 trillion (Tables 2-1, 2-2).

Consequently, developed countries contributed 1.5 percentage points of the total growth in both exports and imports, while developing countries contributed 1.9 percentage points to growth in exports and 2.7 percentage points to growth in imports. This marked the first time in six years that the contribution from developing countries to export and import growth surpassed that of the developed countries (Table 6).

(1) While trade in the U.S. was remarkably strong among the developed countries, Japan and the EU (with the exception of the U.K.) generally made only a small contribution to the expansion in world trade. The U.S. was the driving force behind trade in the developed countries in 1997, accounting for 1.2 percentage points of the developed countries' 1.5 percentage point contribution to export growth and 1.4 percentage points of their 1.5 percentage point contribution to import growth.

(2) Although the EU's contribution to both export growth and import growth was minus 0.1 percentage point, this was largely because of the effects of the shrinkage in trade in U.S. dollar terms due to a weakening of individual currencies against the U.S. dollar. Trade in the EU was not itself depressed. An examination of trade in the major EU economies on a local currency basis shows that exports and imports in Germany, France, Italy and the Netherlands all grew faster than in 1996, and only the U.K. suffered a slowdown in exports and imports in value terms due to the effects of the stronger pound. The value of Japanese trade on a U.S. dollar basis leveled off due to the depreciation of the yen, and Japan's contribution to export growth was just 0.2 percentage points. In the case of import growth, Japan's contribution was minus 0.2 percentage points due to the continued slump in domestic demand.

(3) A change is taking place among the developing countries in their respective contributions to world trade at the inter-regional and intra-regional level. While East Asia remains the largest contributor to exports, contributing 1.2 percentage points to total export growth in 1997, the importance of the Asian NIEs, which had been the driving force behind growth, has declined in relative terms. China's contribution, on the other hand, was up to 0.6 percentage points, which accounted for half of East Asia's contribution. With respect to imports, the slowdown in the economies of East Asia has reduced the region's role in world trade. An examination of contributions to imports shows that China, the leading contributor to export growth in East Asia, made a weaker contribution to imports, and the contribution of the region as a whole to world import growth was just 0.5 percentage points. This contrasts with Latin America, which enjoyed buoyant economic growth. Imports grew strongly due to growth in domestic demand led mainly by investment, and the region's 0.9 percentage point contribution to imports exceeded that of East Asia.

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