The biggest global economic story of the last 30 years is arguably the rise of the emerging markets, a transformation that got a big boost when China took steps toward capitalism during the early 1980s.
While these economies have stumbled in 2013, they continue to be a crucial source of growth for the world.
They also represent crucial sources of economic activity for each other.
Earlier this month, we asked economic Jim O’Neill for what he considered to be the most important chart of the year.
O’Neill, the retired Goldman Sachs economist who coined the BRICs acronym, not surprisingly offered something on the emergence of the emerging markets.
“United Nations Development Programme (UNDP) had a brilliant chart showing the changing patterns of world trade — contrasting ‘North-North’ with ‘South-South’ — demonstrating that world trade is going through a huge evolution,” he told us.
South-South Cooperation is a term from the UN that essentially incorporates all of the major emerging economies. In contrast, North-North consists of developed economies like the U.S., Western Europe, and Japan.
“South — South trade offers developing countries access to affordable capital goods that are often more appropriate to their needs than are capital goods from richer countries and that are therefore more likely to be acquired, adopted and imitated,” wrote the UNDP. “Even India has benefited. In 2010, capital goods such as electrical machinery, nuclear reactors and boilers dominated India’s imports from China (60%) and cost an estimated 30% less than if they had been sourced from richer countries.”
The divide between emerging and developed markets continues to close.