Global production is rebalancing in ways not seen for 150 years. Growth in the cross-border movement of goods, services, people and ideas has been remarkable. By 2011, trade accounted for nearly 60% of global output. Developing countries have played a big part in this (box 2): between 1980 and 2010, they increased their share of world merchandise trade from 25% to 47% and their share of world output from 33% to 45%. Developing regions have also been strengthening links with each other: between 1980 and 2011, South–South trade as a share of world merchandise trade rose from 8.1% to 26.7% (figure 5).
All developing countries are not yet participating fully in the rise of the South. The pace of change is slower, for instance, in most of the 49 least developed countries, especially those that are landlocked or distant from world markets. Nevertheless, many of these countries have also begun to benefit from South–South trade, investment, finance and technology transfer. There have, for example, been positive growth spillovers from China to other developing countries, particularly close trading partners. These benefits have to some extent offset slackening demand from the developed countries. Growth in low-income countries would have been an estimated 0.3–1.1 percentage points lower in 2007–2010 had growth fallen at the same rate in China and India as in developed economies.
Many countries have also benefited from spillovers into sectors that contribute to human development, especially health. Indian firms, for example, are supplying affordable medicines, medical equipment, and information and communications technology products and services to countries in Africa. Brazilian and South African companies are doing the same in their regional markets.
Nevertheless, exports from larger countries can also have disadvantages. Large countries generate competitive pressures in smaller countries that can stifle economic diversification and industrialization. But there are also instances where competitive jolts have been followed by industrial revival. A competitive role today may easily turn into a complementary role tomorrow. Moving from competition to cooperation seems to depend on policies for dealing with new challenges.