Outsourcing and supply chain integration of this sort has lowered the price of a wide range of manufactures sold across the world (figure 3). It has also placed downward pressure on the wages of lower skilled jobs in advanced economies. Both have translated to less inflationary pressure in the advanced economies.
A number of emerging economies have participated in the expansion of global supply chains. However, the huge scale and growth of China’s economy has had a profound effect. Since joining the World Trade Organisation (WTO) in 2001, China has quickly become the largest exporting nation in the world, with around 13 percent of merchandise exports and 18 per cent of manufacturing exports (figure 4).