WE ALL RELY ON global trade. And despite the many disruptions to the global trading system over the past few years—by conflict, climate change, the Covid-19 pandemic and lockdowns—countries are still remarkably interconnected. Recent research from the McKinsey Global Institute (MGI) shows that every region in the world relies on imports for more than 25% of at least one important type of good.
Self-sufficiency is a mirage, and it ignores the benefits that this interconnectedness brings: improving efficiency, increasing global product availability, and fostering economic growth. India is no different. In fact, the country’s trade interconnectedness should be seen as a strength powering its growth in the next few years.
These benefits come not just from trade connections but also from trade concentrations. We estimate that about 40% of global trade by value is concentrated. By this, we mean that importing economies rely on three or fewer nations for this share of global trade. Furthermore, 25% of this is concentrated at a global level. This means that for some products, such as laptops, soybean, or iron ore, there are only a few countries that export nearly all of them.
This story is from the February 18, 2024 edition of Business Today India.
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This story is from the February 18, 2024 edition of Business Today India.
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