Geopolitical tensions, the digital revolution and climate change are reshaping trade-led development as they pose significant risks to economic convergence while bringing opportunities，said the World Trade Organization (WTO) in the World Trade Report 2024 released on Monday.
In the 2024 edition of the "World Trade Report" the WTO estimated that global factors such as geopolitical tensions, regional conflicts and trade sanctions have impacted the stable foundation of world economic growth over the past 30 years, potentially leading to trade fragmentation.
On the other hand, the increased capital and skill intensity of modern manufacturing have reduced the scope for manufacturing-led growth in low-income economies. Meanwhile, climate change poses even greater challenges, particularly for these nations.
However, the report suggested that these challenges have also brought opportunities.
For example, developing economies can reduce trade costs with the help of digitalization, pivot toward service-led growth, or seize the demand for renewable resources in the global green transformation to achieve development.
The report presented strong evidence that trade has played a crucial role in narrowing income disparities among economies since the WTO was established 30 years ago.
The report pointed out international trade has contributed to making the global economy more inclusive. It showcases data establishing a strong link between trade participation and the narrowing of income disparities among economies. From 1996 to 2021, a high trade share in GDP is significantly correlated to faster growth in low- and middle-income economies, converging to the level of GDP per capita in high-income economies.
"Perhaps the biggest takeaway from the report is its reaffirmation of trade's transformative role in reducing poverty and creating shared prosperity," WTO Director General Ngozi Okonjo-Iweala said in her foreword to the report.
"But the second biggest takeaway is that there is much more we can do to make trade and the WTO work better for economies and people left behind during the past 30 years of globalization," she added.
The WTO highlighted the need for supportive domestic policies such as vocational training, unemployment benefits, education for a more skilled and mobile workforce, and competition policy to ensure consumers benefit from lower prices, as well as reliable infrastructure, and well-functioning financial markets.
It urged the reduction of trade costs, the bridging of the digital divide, and updates to the WTO rulebook to account for the increasing significance of trade in services, and digital and green sectors.
The report also called for better coordination among international organizations, since this could help leverage synergies between trade policies and complementary policies, and boost inclusiveness across and within economies.
Geopolitical tensions, digital revolution, climate change reshape development : WTO
