Working paper

Changing trade patterns, unchanging European and global governance

If our projections to 2020 are broadly right, then many established frameworks for the running of the world economy and its governance are not going t

Publishing date
25 February 2014

See also comment 'The World in 2020'

The world economy is going through its biggest transformation in a relatively short space time. There have been many explanations for this phenomenon but the unprecedented scale and pace of this change and, most crucially, its implications, still seems little understood. In turn, there has been little preparation for, or adjustment to, this changing world, though if the change continues at this pace, the effectiveness of many global institutions in their current form will be threatened.

We highlight the dramatic degree of the shifts taking place in world GDP and trade and include fresh projections of what world trade patterns might look like in 2020, should the trends observed over the past decade to continue. We also show the resulting shift in trade relationships for many key countries. European member states tend to have quite different trading partners’ profiles, and this heterogeneity is quite likely to become more pronounced with time. This, in turn, suggests a significant challenge for the effective functioning of the euro area and weakens the original rationale of its creation.

If our projections to 2020 are broadly right, then many established frameworks for the running of the world economy and its governance are not going to be fit for purpose, and will need to change. The global monetary system itself, and global organisations such as the IMF, G7, and G20 are going to have to adapt considerably if they want to remain legitimate representatives of the world order. The alternative is their relegation to irrelevance.

About the authors

  • Jim O‘Neill

    Jim was a Visiting Research Fellow to Bruegel. He conducted research on aspects of changing global trade, global governance, and measuring better and targeting higher sustainable economic growth.

    Jim worked for Goldman Sachs (GS) from 1995 until April 2013. He joined Goldman in 1995 as a partner, Chief Currency Economist and co-head of Global Economics Research. From 2001 through 2010, he was Chief Economist and head of Economics, Commodities and Strategy Research (ECS). In September 2010, he became Chairman of Goldman Sachs Asset Management (GSAM).

    Prior to joining GS, Jim was head of research, globally, for Swiss Bank Corporation (SBC) from 1991 to 1995. He joined SBC in 1988. Prior to that, he worked for Bank of America and International Treasury Management, a division of Marine Midland Bank.

    Jim is the creator of the acronym BRICs. He has published much research about BRICs (which has become synonymous with the emergence of Brazil, Russia, India and China) and the broader emerging markets, as the growth opportunities of the future. This autumn, Jim is making a series for BBC Radio 4 about Mexico, Indonesia, Nigeria and Turkey, due to be aired in January 2014.

    Jim is on the board of a number of research organisations including, Itinera, the UK-India Round Table and the UKIBC. He is also Chairman of the Greater Manchester Local Enterprise Partnership Advisory Board.

    He is one of the founding trustees of the UK educational charity, SHINE. Jim also serves on the board of ‘Teach for All’ and a number of other charities specialising in education and in September 2013 he became a Non-Executive Director of the UK Government’s Department of Education.

    Previously, Jim served as a Non-Executive Director of Manchester United before it returned to private ownership in 2005.

    In 1978, Jim earned a degree in economics from Sheffield University and in 1982 a PhD from the University of Surrey. He received an Honorary Doctorate from the Institute of Education, University of London, in 2009 for his educational philanthropy.

  • Alessio Terzi

    Alessio Terzi, an Italian citizen, joined Bruegel in October 2013. Prior to this, Alessio was a Research Analyst in the EMU governance division of the European Central Bank. He has also worked for the macroeconomic forecasting unit of DG ECFIN (European Commission), the Scottish Parliament’s Financial Scrutiny Unit, and BMI Research (Fitch group), a country risk and forecasting firm in the City of London, where he was a Europe Analyst.

    He holds a Bachelor's degree in International Economics from Bocconi University and an MPA in European Economic Policy from the London School of Economics, where he specialised in public economics. During his studies, he spent a semester at Dartmouth College (USA). Alessio’s main research interests include structural reforms, competitiveness, EMU governance, and the G20.

    Between 2016-2018, Alessio was a Visiting Fulbright Fellow at the Kennedy School of Government of Harvard University. He completed a PhD in Political Economy at the Hertie School of Governance in Berlin, with a thesis on economic growth, written under the supervision of prof. Henrik Enderlein, Dani Rodrik, and Jean Pisani-Ferry.

    He is fluent in Italian and English, has a good knowledge of French, and an intermediate level of German and Spanish.

    Declaration of interests 2015

    Declaration of interests 2016

    Declaration of interests 2017

Related content

Book

Sparking Europe’s new industrial revolution: A policy for net zero, growth and resilience

This book assesses what must be done to implement industrial policy in a way that will achieve overarching goals while minimising distortions.

Philippe Aghion, Ketan Ahuja, Chad P. Bown, Uwe Cantner, Chiara Criscuolo, Antoine Dechezleprêtre, Mathias Dewatripont, Ricardo Hausmann, Guy Lalanne, Ben McWilliams, Dani Rodrik, Simone Tagliapietra, Alessio Terzi, Cecilia Trasi, Laura Tyson, Reinhilde Veugelers, Georg Zachmann and John Zysman