The Role of Trade in Developing Countries’ Road to Recovery



The World Trade Organization and The World Bank Group

Trade has been a phenomenal driver of poverty reduction over the past 30 years and participation in GVCs has been a force for job and wealth creation. Nevertheless, tensions and skepticism over the impact of trade have been rising. This is happening at a time when trade is more important than ever to cope with and recover from the COVID-19 pandemic. A retrenchment from trade now would further increase the serious adverse impact of the pandemic on poverty.

Trade can also play a key role in addressing the challenge of global warming. While trade results in carbon emissions, it is fundamental to the solution to climate change in terms of facilitating the transition to low-carbon growth and supporting adaptation to rising temperatures and changing precipitation patterns. Trade is also critical to recovery from increasingly frequent extreme weather events.

Open trade policies and efforts to reduce trade costs remain critically important while recognizing the need to recalibrate an approach to trade that places it firmly and squarely within a resilient, inclusive, and green approach to development. [1] This note summarizes three inter-related policy challenges to which trade can be a fundamental part of the answer: (i) the recovery from COVID-19 and economic resilience to future global shocks; (ii) delivering on the promise to end extreme poverty and achieving a more inclusive world; and (iii) mitigating carbon emissions and adapting to climate change.


To read the original report by the WTO and WBG, please click here.