Chart of the Week –South South Trade Booming

In a recent Mckinsey publication “Global Flows in a Digital Age”, there was a chart that shows South-South trade, or for clarity sake, emerging market to emerging market trade (think China and Brazil), comprises 24% out of $17 trillion in world trade in 2012, up from 10% ($6.6 trillion) in 2000. To put that into perspective, between 2001 and 2011, China - Africa trade grew from $10.8bn to $166.2 billion.

There are so many questions but this is an important area to get deeper understanding of, especially as China and India tie aid, foreign investment, and diplomacy to these trade flows.  For example, what kind of trade does this booming market represent? Is it mostly commodity flows going to support the larger markets like China and India, or does it include semi finished goods, infrastructure support, services, etc.  How does this trade get financed? Are banks playing a big role here, or is the Export development agencies actively supporting these flows? What role do State enterprises play in this trade?

This is certainly a trend in trade that is important to watch and better understand.


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