A new paper from the World Trade Organization suggests there is a distinct possibility that countries will form into mega-regional trading blocs in the next two decades.
The paper, “Simulating world trade in the decades ahead: driving forces and policy implications
,” attempts to project how the global economy will function through 2035. The primary objective of the research was to attempt to establish which current trends in trade are expected to continue and to what extent individual policy areas will matter for specific countries and regions.
The authors -- Lionel Fontagné of the University Paris 1 and CEPII (Centre d’Études Prospectives et d’Informations Internationales, the French research center for international economics); Jean Fouré of CEPII; and Alexander Keck of the WTO -- assert that the stakes for developing countries are particularly high.
Technological progress is likely to have the biggest impact, the report said, with population changes also playing a major role.
“For some countries, improving workers’ skills will be crucial; for others labor shortages may be addressed through migration,” the paper says. “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.