Critical Review Of The Article: The Rise of Middle Kingdoms - Emerging Economies in Global Trade

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BIBLIOGRAPHY Hanson, Gordon H. "The Rise of Middle Kingdoms: Emerging Economies in Global Trade." Journal of Economic Perspectives (2012): 41-64.
The main purpose of the article is to assess how the integration of low and middle-income economies into the global economy has resulted in changes in the international trade. The author has achieved this by focusing on the growth of trade between developing economies and trade between developing and developed economies.
The article is qualitative research-based as it gives insight into the rise of emerging economies through observation of China and Indian economies. However, the author has not clearly identified the research methodology and any possible limitations that arise as a result of adopting this technique. In addition, the significance of the topic has not been clearly explained, and the author fails to define what emerging economies are. With an assumption that the readers already know what emerging economies, the author directly goes to addressing their effect on global trade.
The author notes that the growth of middle-income economies has brought changes in the global economy in terms of production and distribution of trade gains across borders and that there has been increased growth in international trade over the years. The author attributes this growth between developing economies to the reduction of trade costs, as a result of reduced shipping costs and unilateral trade reforms. However, the evidence cited in the article does not fully support this argument. One of the studies reviewed reveals that air transportation costs have reduced although this is not the case with water transportation, which is the main mode of transport used by these middle economies. This, therefore, raises the question of whether it is accurate to attribute the growth to trade costs reduction as a result of low shipping costs. In addition, the author opines that the reduction in tariff rates in developing economies is not enough to account for the growth in trade shares between developing countries. This argument is supported by evidence from data produced in an earlier period, noting that the tariff changes have little significance on the growing trade shares.
The author also attributes the growth to the increased outsourcing and division of manufacturing into multiple stages that can then be carried out in countries with least production costs. This division into stages accounts for a value-added chain that translates into trade flows across the borders. The value added is the...