Development and building trade capacity
Introduction
Aid for Trade seeks to enable developing economies, and in particular least-developed countries (LDCs), to use trade as a means of fostering economic growth, sustainable development and poverty reduction. It promotes the integration of developing economies, especially LDCs, into the multilateral trading system and aims to galvanize support to build supply-side capacity and trade-related infrastructure in these economies to improve trade performance.
Acknowledgements
This publication is the result of a joint effort of the OECD and the WTO and was prepared under the overall guidance of Michael Roberts (Head, Aid for Trade Unit, Development Division, WTO) and Olivier Cattaneo (Head of Unit, Architecture and Analysis, Development Co-operation Directorate, OECD). WTO Deputy Director-General Xiangchen Zhang, Taufiqur Rahman (Director of the Development Division, WTO) and María del Pilar Garrido Gonzalo (Director for Development Co-operation, OECD) supervised the work. The publication was edited and reviewed by Ross McRae and Anthony Martin of the Information and External Relations Division of the WTO, and by Henri-Bernard Solignac Lecomte, Head of Communications of the OECD Development Cluster. Additional contributions were provided by Masato Hayashikawa (Development Co-operation Directorate, OECD).
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.
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.
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.
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.