Consider the following statements:
Statement 1: Over the last two decades, the volume of South-South trade (trade between developing nations) has expanded at a considerably faster rate than North-South trade.
Statement 2: The proliferation of regional trading blocs among emerging economies, combined with their rapid industrialization and growing middle-class consumer bases, has diversified their export destinations away from traditional developed markets.
Which one of the following is correct in respect of the above statements?
Correct answer: A
Explanation
South-South trade has indeed expanded far faster than North-South trade over the past two decades, so statement 1 is correct. The growth of regional trading blocs, rapid industrialisation and the rising middle-class consumer base among emerging economies genuinely drives this shift by diversifying export destinations away from developed markets, so statement 2 correctly explains statement 1.