The World Trade Organization (WTO) has underscored that open trade alone is insufficient to bridge the gap between wealthy and developing nations. The organization’s 2024 report on global trade highlights the need for additional measures to assist poorer countries in achieving greater economic equality.
In the foreword to the report, WTO Director-General Ngozi Okonjo-Iweala emphasized the transformative role of trade in reducing poverty and fostering shared prosperity. She countered the prevailing notion that trade and institutions like the WTO have not benefited poor countries and have contributed to a more unequal world.
While acknowledging the positive impact of trade, Okonjo-Iweala stressed the need for further efforts to make trade and the WTO work more effectively for economies and individuals that have been left behind during the past 30 years of globalization.
The report revealed that low- and middle-income economies tend to engage less in international trade, receive fewer foreign direct investments, and rely heavily on commodities. They also export fewer complex products and trade with a limited number of partners.
Protectionism, as demonstrated by the report, is not an effective path to inclusiveness. It can lead to higher production costs and invite retaliation from trading partners. The WTO’s chief economist, Ralph Ossa, emphasized that true inclusiveness requires a comprehensive strategy that combines open trade with supportive domestic policies and robust international cooperation.
The report identified domestic policies that are crucial for making trade more inclusive, such as vocational training, unemployment benefits, and education for a skilled and mobile workforce. Additionally, competition policy is essential to ensure that consumers benefit from lower prices, reliable infrastructure, and well-functioning financial markets.
