Overview

  • Trade is an engine of growth that creates jobs, reduces poverty and increases economic opportunity. Over one billion people have moved out of poverty because of economic growth underpinned by open trade since 1990. The World Bank Group supports an open, rules-based, predictable, international trading system.

    Open trade brings important, often overlooked benefits to lower-income households by offering consumers more affordable goods and services. For the extreme poor, trade can help reduce the prices of food. For women, trade can create jobs and increase incentives for girls to stay in school. 

    Developing countries often struggle with indirect factors that hinder their access to global markets, such as anti-competitive business practices, regulatory environments that are unfavorable to business growth and investment, or limited infrastructure capacity. Even a country with liberal and transparent trade policy suffers if its markets are not connected, and many of the world’s poorest people live in places that are landlocked, remote or otherwise ill-served by international trade links. The World Bank Group helps its client countries improve their access to developed country markets and enhance their participation in the world economy by overcoming these obstacles.

    Despite the benefits trade can bring to economies, not everyone is experiencing the benefits of globalization. Trade, with the productivity gains and technological advances that accompany it, can result in job losses in certain regions and industries. We are working to advance policies that help all countries benefit from the opportunities that come with trade and technological change. These include short-term responses such as training programs and job search assistance, but also long-term solutions that build more resilient economies. Strong safety nets, access to education that prepares students for the jobs of the future, and policies that help workers become more mobile are all critical to these solutions.

    The world needs to strengthen the global trading system to promote greater inclusiveness and help developing countries address trade-related constraints to growth. The system of global trade rules that has nurtured unprecedented economic growth across multiple generations faces tensions. These tensions should not prevent us from looking at the unique untapped benefits further trade reform can bring to the global economy.

    Last Updated 3/13/19

  • The WBG is supportive of an open, rules-based, predictable multilateral trading system, and among its objectives are to help countries participate in and enjoy the benefits of such a system. Key strategies for reaching these goals are supporting trade agreements, emphasizing trade and competitiveness at the core of national development strategies, and promoting trade-related reforms through effective Aid for Trade programs.

    The WBG helps governments design and implement policies to maximize their trade competitiveness in both goods and services. The main pillars of the World Bank Group’s work in trade are:

    • Trade Policy and Integration: Analysis and policy advice to help countries eliminate unneeded non-tariff measures, or NTMs | Modernizing services regulations and trade | Addressing the poverty and labor impacts of trade policies and shocks | Supporting global and regional integration, including free trade agreement negotiations and World Trade Organization accession and participation.
    • Trade Performance: Help for governments in designing and implement policies to maximize their trade competitiveness in both goods and services. | Assistance to create comprehensive policy frameworks that shape individual firms’ capacities and incentives to import and export | Help for governments to reap the gains from openness to trade and to manage both adjustment costs and external shocks.
    • Trade Facilitation and Logistics: Strengthening trade corridors, supply chains, and trade logistics | Modernizing border management | Enhancing connectivity between firms, markets, and consumers.

    To fund much of this work, the World Bank Group has three main, trade-related trust funds totaling $91 million. These include the Umbrella Facility for Trade, the Trade Facilitation Support Program (TFSP) and the Enhanced Integrated Framework (EIF) trust fund.

  • The WBG provides rigorous analysis of key issues in global trade as well as country-focused engagements in over 100 countries around the world. These focus on helping client countries identify reforms to promote competition, exports, and private sector development, as well as on trade facilitation, logistics, and border management to help lower trade costs.

    Analysis and data for key issues in global trade: The World Bank provides up to date data and analysis of the latest issues in global trade including:

    • Trade tensions: the impact of heightened trade tensions between China and the US on global trade and supply chains, with a focus on developing countries.
    • Trade and poverty: Analytical work program on distributional impacts of trade, with a focus on: (i) Welfare effects of tariff and non-tariff measures changes; (ii) Mechanisms through which trade can affect local poverty rates and labor market dynamics; (iii) Implications of rise in automation on welfare and the jobs destruction in developing countries (and jobs reshoring to high-income economies).
    • Logistics and connectivity: The biennial Logistics Performance Index (LPI) measures the logistics "friendliness" of 160 countries based on a worldwide survey of freight forwarders and express carriers. [link]

    Policy and reform support: Trade Policy and Performance: Analysis and policy advice to help countries compete globally.

    • Example: The Government of Ethiopia has embarked upon a path of political and economic transformation. The dominance of state-owned logistics operator results in lack of competition and undermines the potential for trade to boost growth and poverty reduction. The WBG is supporting a significant reform agenda targeting the logistics sector as part of a combined macro-fiscal growth agenda on trade, investment, competition and the business environment.

    Trade Facilitation and Logistics: Strengthening trade corridors, supply chains, and trade logistics | Modernizing border management | Enhancing connectivity between firms, markets, and consumers. Lending and Technical Assistance:

    • Bureaucracy/paperwork, port and custom handling, and transport infrastructure bottlenecks continue to be a major barrier to trade in developing countries, especially sub-Saharan Africa. A one-day reduction in inland travel times leads to a 7 percent increase in exports in Africa. A one-day reduction in delay at border increases trade by one percent. But improving trade facilitation requires cooperation and capacity, including improvements to trade-related infrastructure and technical assistance for customs. The WBG is a major provider of trade facilitation assistance, with a current portfolio over $7 billion, across more than 70 countries.
    • Example: Over the past three years the World Bank has been assisting countries in the Great Lakes region through a novel $140 million project to improve the trading environment for small scale traders, most of whom are women.  When the project started, cross-border traders regularly had to pay bribes and suffer harassment, including sexual abuse.  Through improvements to infrastructure, streamlining the border clearance processes, training of officials and traders, and better security (such as lighting and cameras), we have seen up to a 37 percentage point reduction in incidents of harassment for traders in eastern DR Congo over a three year period. Over the same period, border crossings increased substantially, from 20,000 per day in 2015 to between 40,000 and 50,000 per day in 2018.
    • Example: The World Bank is assisting Nepal and India to facilitate efficient goods trade by reducing key trade-related infrastructure constraints. Both countries can increase cross-border trade by alleviating soft barriers to trade, including those related to policy, procedures, and systems for international trade transiting between the two countries. One of the early successes of the project was the development of the Nepal Trade Information Portal, was launched in 2016, a one-stop window for information relating to import into, export from, and transit through Nepal. The two governments recently opened a new trade corridor to the port of Vishakhapatnam. The new corridor Is much more efficient with port clearance time less than half that in Kolkata.

    Regional integration: The World Bank supports global and regional integration, including free trade agreement negotiations and World Trade Organization accession and participation.

    • Example: The World Bank is supporting the African Union to assist the creation of the African Continental Free Trade Area (AfCFTA) which has the potential to boost intra-regional trade and significantly reduce poverty.  We are assessing the effects of tariff reductions on government revenues and quantifying the impact on trade, growth and poverty, including women and youth.  
    • Example: A series of studies on the Belt and Road Initiative shed light on the ambitious effort to improve regional cooperation and connectivity on a trans-continental scale. The studies are designed to help policymakers assess the effects of the BRI and to identify policies that will help maximize the benefits and mitigate the risks. 

     

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PAGETITLE_VIDEO Oct 07, 2016

The Role of Trade in Ending Poverty



PHOTO GALLERY

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In Depth

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Data

TCdata360

TCdata360 is an initiative of the World Bank Group's Trade & Competitiveness Global Practice, which helps countries achieve the Bank Group's twin goals, ending extreme poverty and boosting shared prosperity, through ...

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Brief

Aid for Trade

Aid for Trade is a multilateral initiative designed to assist developing countries integrate into the world economy.

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Brief Apr 04, 2018

Trade Facilitation and Logistics

Experts in the World Bank Group work with developing country policymakers and private sector leaders to increase connectivity and facilitate trade.

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Results Apr 04, 2018

Stronger Open Trade Policies Enable Economic Growth for All

Trade is central to ending global poverty. Countries that are open to international trade tend to grow faster, innovate, improve productivity and provide higher income and more opportunities to their people.

Additional Resources

Contact

Washington, DC
Erin Scronce
escronce@worldbank.org