Share of Product Groups in World Merchandise Trade, 1900-2020

Share of Product Groups in World Merchandise Trade, 1900-2020

Source: adapted from WTO, World Trade Report. Share of merchandise exports. Note: Prior to 1955, fuels and mining products were classified as natural resources.

Before the Second World War, international trade was dominated by agricultural goods and natural resources (mining products and fuels). Manufactured goods accounted for about 40% of global merchandise exports, while agricultural goods accounted for about 60%. National markets tended to impose restrictions on the imports of manufactured goods as the prevailing policy was to support and expand national industries. Commodities, particularly those not readily produced nationally, such as oil or grains, were less restricted. Trade was driven by factors such as scarcity and necessity.

After the Second World War, manufactured products started to take a growing share of the value of international trade. While they accounted for 44.7% of all exports in 1955, this share climbed to 74.8% in 2000 and 71.1% in 2020. Technological innovations in the transport sector, namely containerization, enabled fast and efficient handling of manufactured goods, thus lowering transportation costs. Trade became more a matter of convenience.

Globalization also impacted the trade of manufactured goods with outsourcing and offshoring. It is relatively common for a part to be traded several times if used to assemble a more complex product such as a car. In a world where some resources may be scarcer, a distinct possibility exists that agricultural and mineral products would reclaim their former share of global trade, which used to be in the range of 40 to 50%. Further, the automation and robotization of several manufacturing segments are likely to have an impact on the composition of global trade since it becomes possible to locate closer (or next to) markets.