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Overview

  • The World Bank Group helps countries improve their access to world markets and enhance their participation in the global trading system. Trade is an engine of growth that creates better jobs, reduces poverty, and increases economic opportunity. Recent research shows that trade liberalization increases economic growth by an average by 1.0 to 1.5 percentage points, resulting in 10 to 20 percent higher income after a decade. Trade has increased incomes by 24 percent globally since 1990, and 50 percent for the poorest 40 percent of the population. As a result, since 1990, over one billion people have moved out of poverty because of economic growth underpinned by better trade practices. 

    Trade is also linked to higher female labor participation with greater formality and higher wages. Exporters in developing countries employ more women than non-exporters and women comprise up to 90 percent of the workforce in export processing zones. Fostering cooperation through trade and business is pivotal in helping countries escape conflict.  

    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 COVID-19 pandemic has highlighted the need to keep critical goods flowing through borders. The WBG is supporting country-led reforms to limit the impact of the pandemic and to foster the economic recovery. 

    In this context, 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: Dec 22, 2020

  • 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 supports countries through development of better trade policy and integration into regional and global economies, increasing trade performance, and facilitating trade through border management and logistics. We produce cutting-edge applied global knowledge and we also support countries directly. 

    GLOBAL ANALYSIS AND DATA:

    Global Studies: This includes assessing developments in the trade policy arena (e.g. Services for competitiveness; Deep Trade Agreements (DTAs); Trade and poverty links; Global Value Chains (GVCs); Impact of direct and indirect government subsidies on global trade). It also focuses on understanding the impact of new technologies on trade, such as e-commerce, automation, 3D printing and blockchain.

    Global Databases: The Trade unit provides data for global trade analysis, such as the Logistics Performance Index; Exporter Dynamics Database; Services Trade Restrictions Database; World Integrated Trade Solution; Database on Antidumping, Countervailing Measures and Safeguards; and the DeepTrade Agreements Database.

    REGIONAL OR COUNTRY DIAGNOSTICS AND TECHNICAL ASSISTANCE:

    Regional Trade Integration Analysis: Assess potential impacts of trade reforms, such as unilateral tariff changes, and bilateral or regional Preferential Trade Agreements, or other major initiatives in regional integration (e.g. the African Continental Free Trade Area and the Belt and Road Initiative) on GDP, sectoral output, trade, wages, and employment, as well as on sectoral reallocation and adjustment costs, poverty, and income distribution—both at aggregate level and for disaggregated geographical areas (localized labor markets) and target groups, notably women.  

    Trade Diversification, Competitiveness Diagnostics, and Integration into GVCs: Identify constraints and opportunities for growth and diversification of mechandise exports, promote export sophistication, upgrading, and export survival. 

    Services Trade Competitiveness and Regulatory Diagnostic: Identify potential for expanding services trade across all sectors and/or for specific sectors (e.g. digital/ICT; tourism; professional services; transport/logistics; health and education services). 

    Logistics Services and Connectivity Diagnostic: Diagnostics and advisory services to identify measures to reduce logistics costs and improve connectivity with domestic and international markets, helping countries improve how goods can move efficiently through the network of services (transportation, warehousing, brokerage, etc.) to their final destinations. 

    Trade Facilitation & Border Management Diagnostic and Technical Assistance: Help countries transition to modern border management and procedures, provide guidance on streamlining procedures and reduce time/costs for private sector, and implement the WTO Trade Facilitation Agreement (TFA).

    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.

    Last Updated: Dec 22, 2020

  • 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 and COVID-19: Since the onset of the global pandemic, the WBG has advised governments on best practices to keep trade flowing, particularly for goods necessary to address urgent health needs. The WBG also provides analysis on emerging trends on goods and services trade, including vaccines, that have been impacted by the pandemic.
    • Trade and Gender: New trends in global trade—especially the rise in services, global value chains, and the digital economy—are opening up important economic opportunities for women.  
    • 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. 

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

    • Example: The Government of Ethiopia is on a path of fundamental political and economic transformation. The dominance of logistics by a state-owned operator results in a limited range of services and a 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, regulation, 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: In the Democratic Republic of Congo, Uganda and Rwanda, the Bank is implementing the Great Lakes Trade Facilitation project, a US$79 million regional operation that started in 2016 (ongoing) and focuses on small-scale traders, the majority of whom are women. The project seeks to improve core trade and commercial infrastructure in the border areas, simplifying border crossing procedures, and improving the standards of treatment of traders and officials. Implementation has led to greater accountability and less impunity of officials, reflected in declining rates of harassment at key borders (from 78 percent to 45 percent in South Kivu), improvements in security at the border (as a result of new buildings, lighting, cameras etc), extended border opening hours, and increased trade flows (for instance from 40-50 thousand traders crossing at the ‘Petite Barriere’ border in Goma pre-COVID, almost double when the project was prepared).
    • Example:  Over the last two years, the World Bank has supported the governments from Guatemala and Honduras, the Secretariat of Economic Integration in Central America (SIECA), and the private sector in developing a comprehensive solution to address trade bottlenecks at the border between the two countries.  As a result, the concept of a “Customs Union” was piloted, through which both countries integrated their trade procedures and removed duplicative processes. The countries have recently cut transit times from 10 hours to just 15 minutes, which is estimated to have increased trade by 7 percent.   

    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.  

    Last Updated: Dec 22, 2020

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