International trade has proven to be a powerful driver of inclusiveness, as revealed in the World Trade Report 2024 published by the World Trade Organization (WTO). Examining trends over the past three decades, the report highlights the profound impact of trade on reducing income disparities and combating poverty in low- and middle-income economies.
WTO Director-General Ngozi Okonjo-Iweala said the report reaffirms the essential role of trade in reducing global inequality. “Perhaps the most important takeaway from the report is that it reaffirms the transformative role of trade in reducing poverty and creating shared prosperity,” she said. This runs counter to the widespread perception that globalization has exacerbated inequality.
The report highlights that, since the WTO was established 30 years ago, low-income economies have seen their per capita incomes triple on average, with a significant growth rate compared to high-income economies. This phenomenon of economic convergence is largely due to the reduction of trade costs, facilitated by international agreements and institutional reforms carried out under the auspices of the WTO. Trade between WTO members has increased by 140% on average, with a beneficial effect on poverty reduction.
However, the report does not gloss over remaining challenges. While many economies have benefited from this trade momentum, some regions, notably in Africa, Latin America and the Middle East, continue to be left behind. Low participation in trade, over-reliance on commodity exports, and inadequate trade infrastructure are identified as the main obstacles to inclusive growth in these areas.
WTO Chief Economist Ralph Ossa points out that “less trade will not promote inclusion, and trade alone will not promote inclusion. True inclusion requires a comprehensive strategy – one that integrates trade openness and supportive domestic policies as well as strong international cooperation.”
The report therefore calls for a global strategy to maximise the benefits of international trade. This strategy involves national support policies, such as vocational training, education, as well as reforms to make the labour market more flexible and inclusive. In addition, it highlights the importance of adapting trade rules to the new challenges posed by digital transformation and the green economy, two sectors where global trade is expanding rapidly.
Digital trade in particular is seen as a key opportunity for less integrated economies, as well as for small and medium-sized enterprises and women. Adopting policies that promote better digital connectivity and adapted infrastructure will increase inclusiveness in global trade, according to the report.
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