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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

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Washington, DC
Elizabeth Price