Unlocking the economic potential of South-South trade in Davos
Trade between emerging markets in the Global South is expected to rise from 25% of global trade today to 30% in 2030.
There are significant gains to be made in the process, with “South-South” trade already representing $4.28 trillion – more than half – of total developing economies’ exports in 2018.
While the growth of emerging markets is impressive, there is more to be done to realise their full potential. This is seen in countries whose leading trade sectors have significant shares in the global economy, but are virtually absent in emerging markets. For example, Mexico currently has 16% of the world share in video display exports, but a 0% share in Africa and 0.2% share in Asia & Middle East.
South-South trade between Latin America, Africa and Asia is not keeping pace.
But unlocking further growth in trade in these emerging markets, and the economic development that comes with it depends on overcoming the non-tariff barriers that limit growth, such as logistics inefficiency, and far outstrip the cost of tariffs. Trade and logistics will play an essential role in re-energising this growth.
That’s why I’m pleased to be supporting the launch of the World Logistics Passport at the World Economic Forum in Davos.
This major initiative will be led out of Dubai by Customs World with the support of DP World, Emirates and Dnata to boost South-South trade by enhancing connectivity through Dubai and sharing expertise with partner countries.
The World Logistics Passport is a points loyalty scheme. It incentivizes companies and traders to use Dubai’s world-class multimodal facilities in return for cost and time savings and enhanced customs clearances. This increases the ease of moving goods in Dubai and will foster more optimal direct trade routes between Latin America, Africa and Asia than going via Europe.
And it’s already seeing success. A pilot project, which has been operational since July 2019, has led up to 10% increase in trade volumes from initial participants.
One of the key strengths of the World Logistics Passport is the opportunity that it represents globally, enabling partner countries to leverage the expertise of Dubai’s institutions, from DP World’s logistics network with operations in six continents, to Emirates worldwide SkyCargo network and Dubai’s world-class expertise in Customs and trade governance.
As a result, partner countries will be able to improve their own processes and capability to improve security, transparency and ease of moving goods, thus transforming them into global trade hubs in their own right.
I am confident that DP World’s network of ports, economic zones and logistics operations will play a vital role in supporting this initiative, and help boost the economic potential and prosperity of the region as it continues to grow.