Future Opportunities and Trends
Developing and Developed Countries Benefit From Service Exports
Developing countries have seen positive development in trade growth, almost reaching similar levels to developed countries. According to Finextra, “In 2018, developing countries’ export value clocked in at $8,779 billion. $193 billion of that volume was from the least-developed countries.” Beyond 2018, the last ten years has seen positive growth in developing countries for manufacturing goods.
More developed countries like Canada are growing in service export-related trade. For example, technology, transportation, travel, and agriculture (growing steadily for the ninth year), with this, global commercial service imports have seen positive results, with African nations, in particular, reaching 13% growth.
According to a TradeReady article, goods exports have not been as successful in growth due to various global economic challenges. Growth predictions are set at 2.3% for 2020 - compared to 3.3% in 2019. On the other hand, growth in service exports is somewhat steadier, with an estimated 3.9% for 2020 compared to 2019’s 5.1%.
Opportunities to Pivot With Global Value Chains
For smaller or local businesses who want to expand, “flexibility, mobility and lower costs (in some aspects)” will need to be considered to move forward, especially during prevalent uncertainties in the economic markets.
Global Value Chains (GVCs) can help businesses pivot. A recent Finextra article states that the Organisation for Economic Co-operation and Development (OECD) presented analytics that suggested GVCs help businesses expand into new opportunities by leveraging competitive pricing and entering foreign markets.
In their 2020 World Development Report, the World Bank notes that GVCs increase incomes and productivity worldwide, and estimations indicate that almost 50% of global trade is from GVCs.
GVCs can be leveraged by a few important pivots on the part of smaller or local businesses to become a part of international exporting opportunities. Finextra highlights five key actions:
- Develop stronger relations with companies worldwide.
- Strengthen the presence of the business within the global production networks.
- Become “suppliers of large companies.”
- Make use of digital systems and methods, which will reduce the costs of trading.
- Become educated on trade information and technological processes.
Artificial Intelligence and Supply Chains
Trade growth is set for positive changes with the uprising of technology and the digital world. Specifically, artificial intelligence (AI) and machine learning influence supply chains and how traditional trade is handled.
According to IDC Manufacturing Insights Vice President Simon Ellis, “advanced supply chain capabilities can support more efficient and effective current business approaches as well as new business models that translate directly to business performance that is tangible and measurable.”
Further supply chain predictions indicate that almost half of all manufacturing supply chains will have invested in using AI by the end of 2021, which may advance productivity by 15%. The use of these statistics could indicate more opportunities for export growth.
Sustainability Impacting Exporting
Retailers are becoming more aware of what products they want. In response to a recent report from the International Trade Centre (ITC), Executive Director Arancha González said the following: “This report carries an important message for small businesses seeking to export to major industrial nations in the European Union: Retailers consider sustainability key, when buying from suppliers.”
2019 analytics suggest that 85% of retailers announced increased sales of sustainable products over the past five years. Indeed, an increasing number of people want to invest in more sustainable products around the world. This is a notable trend to consider in global exports because it can impact the systems used for exporting goods and services, as well as how business is done moving forward.
With the rise of economic differences across the globe, a need to change how the world exports goods and services is evident.
Services exports are on a steady rise compared to goods exports, and the ever-growing digital age is bringing changes in how trade is done. As consumers become more conscious of making sustainable choices, so too should companies become more conscious about where their supplies come from.
About the Author
Mariliana has an MSC in consumer analytics and business strategy. She has a special interest in fast-moving industries and big data.