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Global Efficiency is on a Downward Slope

globalEDGE Business Beat
February 7, 2019 10:00 AM

Hosted by Tomas Hult, this segment of the globalEDGE Business Beat focuses on the world’s global efficiency and the downturn that started in 2011 and became costly in 2016 and on. International production, strategic global investments, and the infrastructure design of the global economy are all a function of driving satisfaction among a company’s customers.
In brief, the value of world trade has grown consistently faster than the growth rate in the world economy since 1960, and it has been much higher since the turn of the century. Since 2000, trade across country borders has been at least double the total production of all countries combined. By 2020, we expect the value of world trade to be about 167 times larger than it was in 1960, whereas the world economy will be only 65 times larger. The troubling part is that for the first time in seven years, we expect the world’s “global efficiency ratio” to go below 2.60 by the time all calculations are done for 2018, and then become lower in 2019 and 2020 (2.57 to 2.59). What does this mean? Unfortunately, the combination of escalated trade wars using tariffs as the strategy and the dramatic growth in cross-border trade since 2000 relative to total world production spells serious problems.

globalEDGE Business Beat, hosted by Jade Sims, covers discussions with a wide range of global leaders in business, government, and academe to provide information on the latest thoughts, tools, and markets that are flourishing globally.

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