Development and building trade capacity
Acknowledgements
The World Trade Report 2024 was prepared under the general responsibility and guidance of Johanna Hill WTO Deputy Director-General and Ralph Ossa Director of the Economic Research and Statistics Division. Director-General Ngozi Okonjo Iweala Chief of Staff Bright Okogu and Trineesh Biswas from the Office of the Director-General provided valuable advice and guidance.
Foreword by the WTO Director-General
The mission of the World Trade Organization as set out in the preamble to its founding Marrakesh Agreement is to use trade as a means to raise living standards create jobs and promote sustainable development. As we mark the WTO’s 30th anniversary it is clear that members have used the open and predictable global economy anchored in WTO rules and norms to accelerate growth and development with enormous positive impacts for human well-being. At the same time many people and places have not shared adequately in these gains.
Inclusive trade and international cooperation
This chapter discusses how the multilateral trading system has helped some economies to take advantage of trade to further their development but has not succeeded in helping others to harness trade for growth and considers what could be done to ensure that the WTO leaves no economy behind. It also examines the effect of the WTO on how the benefits of trade are shared out within economies and discusses how the WTO and trade can be made more inclusive for people and firms. Finally the chapter outlines the areas in which work at the WTO could be coordinated with work at other international organizations to help make trade more inclusive such as by enhancing infrastructure and digital connectivity to bridge the digital gap or by ensuring coherence between trade and environmental policies.
Introduction
Global trade is often accused of creating a more unequal world but in fact the opposite is happening. Billions of people in developing economies are catching up to the more advanced economies as millions of people in the advanced economies continue to move ahead. This global economic convergence is only possible because the world has become more open and integrated – expanding access to new markets new technologies and new models for achieving rapid sustained and inclusive growth.
Trade and inclusiveness within economies
Trade has raised aggregate welfare and reduced poverty without necessarily raising inequality in many economies but the impact of trade is more complex for individuals. People may benefit from cheaper prices larger variety and export opportunities but they may also face increased competition and may therefore either gain or lose from trade. This chapter reviews why although most people gain from trade some suffer losses. These losses can be aggravated by distortions and barriers such as mobility costs or monopolies that tend to impact more vulnerable groups disproportionately and may prevent them from adjusting to import competition and accessing export opportunities. The chapter also examines why using restrictive trade policy to redistribute gains from trade is often unsuccessful and can have unintended consequences such as retaliation by trade partners. In contrast domestic policies such as education and social protection are more effective in addressing inequality. Their importance is likely to grow as the digital revolution climate change and geopolitics continue to shape the distributional impacts of trade.
Trade and income convergence
The past quarter of a century has witnessed an unprecedented level of income convergence accompanied by the integration of many developing economies into global markets. Despite this some economies have been left behind. This chapter discusses how the participation of developing economies in global trade and investment flows can accelerate structural transformation and enhance productivity growth thereby helping lowand middle-income economies to achieve the economic growth that ensures convergence with high-income economies. The chapter also examines why some economies have taken little advantage of globalization and focuses on barriers to maximizing the gains from trade participation such as trade costs and commodity dependence. Finally the chapter discusses how recent trends in the global economy are shaping future opportunities and challenges for developing economies to leverage trade and foreign direct investment for economic growth and which policies can help to achieve convergence in the upcoming decade.
Executive summary
Never before have the living conditions and prospects of so many people changed so dramatically in the space of a few decades.
Conclusions
Over the past 30 years the world has witnessed a period of unprecedented income convergence accompanied by a steep reduction in poverty but inequality remains high.
Acknowledgements
The World Trade Report 2024 was prepared under the general responsibility and guidance of Johanna Hill WTO Deputy Director-General and Ralph Ossa Director of the Economic Research and Statistics Division. Director-General Ngozi Okonjo Iweala Chief of Staff Bright Okogu and Trineesh Biswas from the Office of the Director-General provided valuable advice and guidance.
Executive summary
Never before have the living conditions and prospects of so many people changed so dramatically in the space of a few decades.
Trade and inclusiveness within economies
Trade has raised aggregate welfare and reduced poverty without necessarily raising inequality in many economies but the impact of trade is more complex for individuals. People may benefit from cheaper prices larger variety and export opportunities but they may also face increased competition and may therefore either gain or lose from trade. This chapter reviews why although most people gain from trade some suffer losses. These losses can be aggravated by distortions and barriers such as mobility costs or monopolies that tend to impact more vulnerable groups disproportionately and may prevent them from adjusting to import competition and accessing export opportunities. The chapter also examines why using restrictive trade policy to redistribute gains from trade is often unsuccessful and can have unintended consequences such as retaliation by trade partners. In contrast domestic policies such as education and social protection are more effective in addressing inequality. Their importance is likely to grow as the digital revolution climate change and geopolitics continue to shape the distributional impacts of trade.
Foreword by the WTO Director-General
The mission of the World Trade Organization as set out in the preamble to its founding Marrakesh Agreement is to use trade as a means to raise living standards create jobs and promote sustainable development. As we mark the WTO’s 30th anniversary it is clear that members have used the open and predictable global economy anchored in WTO rules and norms to accelerate growth and development with enormous positive impacts for human well-being. At the same time many people and places have not shared adequately in these gains.
Disclaimer
The World Trade Report has been prepared under the responsibility of the WTO Secretariat. It does not necessarily reflect the positions or opinions of WTO members and it is without prejudice to their rights and obligations under the WTO agreements.
World Trade Report 2024
Over the past 30 years the world has witnessed a period of unprecedented income convergence as the wide gap in income levels between economies has narrowed. Economic growth has improved living conditions and prospects for many people around the world. However not all individuals regions and economies have benefited equally from the changes brought about by more open trade. The World Trade Report 2024 explores the complex interlinkages between trade and inclusiveness across and within economies. Openness to international trade can drive economic growth but many low- and middle-income economies struggle to diversify or to integrate into world trade. Although trade supports numerous jobs and provides access to affordable goods and services some individuals can face challenges in adapting to new economic conditions following trade openness. However trade protectionism neither protects the overall economy nor promotes inclusiveness within economies. Diversifying global value chains reducing trade costs through digitalization and transitioning to a low-carbon economy can create new opportunities for low- and middle-income economies. Addressing remaining barriers to trade and investment facilitating the implementation of existing WTO agreements and ensuring that the WTO is fit for new challenges are crucial to support inclusiveness across and within economies. Furthermore trade policies need to be complemented by domestic measures such as labour education and competition policies so that the gains from trade can flow to workers and consumers and so that those individuals can move to benefit from those gains. WTO cooperation with other international organizations can magnify combined action on inclusiveness across and within economies.
Trade and income convergence
The past quarter of a century has witnessed an unprecedented level of income convergence accompanied by the integration of many developing economies into global markets. Despite this some economies have been left behind. This chapter discusses how the participation of developing economies in global trade and investment flows can accelerate structural transformation and enhance productivity growth thereby helping lowand middle-income economies to achieve the economic growth that ensures convergence with high-income economies. The chapter also examines why some economies have taken little advantage of globalization and focuses on barriers to maximizing the gains from trade participation such as trade costs and commodity dependence. Finally the chapter discusses how recent trends in the global economy are shaping future opportunities and challenges for developing economies to leverage trade and foreign direct investment for economic growth and which policies can help to achieve convergence in the upcoming decade.
Note
WTO members are frequently referred to as “countries” although some members are not countries in the usual sense of the word but are officially “customs territories”.
Conclusions
Over the past 30 years the world has witnessed a period of unprecedented income convergence accompanied by a steep reduction in poverty but inequality remains high.