With most of the developed world facing a deep financial crisis, a new economic paradigm has emerged for the developing countries to survive in the burgeoning international trade.
Countries like India, Pakistan, Sri Lanka, Turkey, Bangladesh and Maldives have considerably increased dependence on other emerging economies in Asia, West Asia and Africa in the last 10 years from 2001-11 vis-?-vis 1991-2000.
India, for instance, has brought down its dependence on advanced economies from 67.3% on average for exports and 57% for imports during 1991-2000 to just under half for exports and 41.3% for imports on average during 2001-11. The shift implied that the share of emerging and developing countries in India?s exports grew from 30.7% to 47.9% while that of imports rose from 38.4% to 52.2% over the same period.
Traditionally, South and South West Asian countries have been highly dependent on the advanced economies of Europe and North America for their trade. ?The share of the US and Europe in total trade is now close to 40% and this is the success of our market diversification strategies. In fact, the reason why we faced limited damage during the global slowdown is because we added new destinations in the last few years,? said Abhijit Das, head, Centre for WTO Studies, Indian Institute of Foreign Trade.
Another case is of Nepal which reduced its dependence on advanced economies from 74.1% to 31.4% for exports and from 48.2% to 15.8% for imports reflecting a similar rise in the importance of emerging economies.
Similarly, according to UN-ESCAP?s recent report, Iran?s export dependence on the US and EU has declined from 68.4% to 44.1%.
While India has pursued a ?Look East? policy since 1992, which strengthened its trade ties with the ASEAN, the growth of China as the largest trading partner of many South Asian countries has realigned the direction of trade.
?Costs related to wages and social compliance have been increasing in the US which has moved manufacturing to the developing countries,? said Ajay Sahai, DG and CEO, FIEO.