The world economy in the mid 1990s : alternative patterns of trade and growth

The rise of newly industrialized countries ( NICs ) and potential NICs in several regions of theworld has given the world economy a new structure which must be considered in anticpating future trends. In this report, the author analyzes three scenarios of world trade : 1) the base case scenario - ( current intra - OECD policy ), which is on a trajectory of moderate growth. This model produces continuing trade imbalances, especially for the United States and Japan, but also for other non OECD blocs; 2) the lo closed scenario which is more closed, less trade intensive and has a slower growth path. In this scenario, world export growth is more sensitive to decreases in openness ( as measured by the import - GDP ratio ) than to decreases in projected GDP growth rates. The policy conclusion is that sustaining the import capacity and openness of the 36 countries in the three OECD and nine NIC blocks is crucial to sustaining world trade growth; and 3) the hi open ( global growth ) scenario which is more open, with higher growth, more global trade patterns. Simultaneous expansion of the twelve major blocs would assure export growth. Favorable export growth prospects are vital to the growth pattern on which this strategy depends, in which imports grow faster than GDP.