Trade and development: Difference between revisions

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{{short description|Trade as a factor and driver of economic development}}

{{Lead too short|date=September 2021}}

'''[[Trade]]''' can be a key factor in '''[[economic development]]'''. The prudent use of trade can boost a country's [[Economic development|development]] and create absolute gains for the trading partners involved. Trade has been touted as an important tool in the path to development by prominent economists. However trade may not be a panacea for development as important questions surrounding how [[free trade]] really is and the harm trade can cause domestic infant industries to come into play.

==OverviewImportance==

The current consensus is that trade, development, and [[poverty reduction]] are intimately linked. Sustained [[economic growth]] over longer periods is associated with [[poverty reduction]], while [[trade]] and growth are linked. Countries that develop invariably increase their integration with the [[global economy]]. while [[export-oriented industrialization|export-led growth]] has been ,

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Crucially for poverty reduction, the latter two at least are labor-intensive, helping to ensure that growth in these sectors will be poverty-reducing. However, low value-added, [[price instability]] and sustainability in these [[commodity]] sectors means they should be used only temporarily and as stepping stones in the path to [[economic development]].

== Digital trade ==

=== Digital Trade for Development 2023 Report ===

In 2023, the "Digital Trade for Development" report by the [[International Monetary Fund|IMF]], [[OECD]], [[United Nations Conference on Trade and Development|UNCTAD]], [[World Bank Group|The World Bank]], and the [[World Trade Organization|WTO]] detailed the influence of digital trade on developing economies. It highlighted the necessity of international cooperation to maximize digital trade benefits and tackle associated challenges.

Key statistics from the report include:

* Digitally delivered services have grown nearly fourfold since 2005, with an [[annual growth rate]] of 8.1% from 2005 to 2022, accounting for 54% of total services exports by 2022.

* Less developed regions like Africa hold less than 1% of the global share of digitally delivered services exports.

* About 67% of the global population, or 5.4 billion people, were online in 2022, but 2.6 billion remain offline, mostly in lower-income countries.

* Aid for Trade commitments to the [[Information technology|ICT sector]] were around US$ 2.16 billion for 2021-22.

* By the end of 2022, 116 regional trade agreements included digital trade provisions, representing 33% of all such agreements.<ref>{{Cite web |title=Digital Trade for Development |url=https://www.wto.org/english/res_e/publications_e/dtd2023_e.htm |access-date=13 April 2024 |website=www.wto.org/}}</ref>

==Agriculture==

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In [[poor countries]] with low [[population densities]] and enough suitable land area, which includes most countries in Africa and Latin America, agriculture is central to the economy. In poor regions and rural areas within middle-income developing countries, the concentration of poverty in rural areas of otherwise better-off developing countries makes the development of agriculture vital there. Finally, in Net Food Importing Developing Countries (NFIDCs), there is a positive link between growing agricultural exports and increases in local food production, which makes agricultural development if anything even more important, as [[food security]] and the financial stability of the government are also at stake. In [[Vietnam]] in the 1990s, increases in production and export of coffee of 15% a year contributed to a nearly 50% rise in food production in the same period. As agricultural GDP grew 4.6% per year, [[rural poverty]] fell from 66% in 1993 to 45% in 1998 (Global Economic Prospects 2002:40).

Anderson et al. (1999) estimate annual [[welfare spending|welfare]] losses of $19.8 billion for developing countries from agricultural tariffs – even after [[Uruguay Round]] reforms. This is three times the loss from [[OECD]] import restrictions on textiles and clothing. A combination of better market access, and domestic reforms and foreign aid to enhance the ability of developing countries to take advantage of it, could have a significant impact on poverty reduction, and help to meet the [[Millennium Development Goals]].

The largest beneficiaries of agricultural [[economic liberalization|liberalization]] would be OECD countries themselves: welfare losses of $62.9bn a year are estimated as resulting from the distortionary policies (Binswanger and Ernst 1999:5). Nor is the traditional objective of OECD [[agricultural subsidy]] (supporting small farmers) achieved by this system in a manner that could be characterised as efficient: most of the producer support incomes goes to better-off farmers, with the poorest 40% receiving just 8% of the support spent.

==Market access==

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* Anderson, Kym; Hoekman, Bernard; and Strutt, Anna (1999), ''Agriculture and the World Trade Organization: Next Steps'', August 1999, mimeo

* Binswanger, Hans; and Lutz, Ernst (1999), ''Agricultural Trade Barriers, Trade Negotiations, and the Interests of Developing Countries''; paper prepared for UNCTAD X - High-level Round Table on Trade and Development: Directions for the Twenty-first Century, Bangkok, 12 February 2000

* {{cite journal

| last1 = Irwin| first1=David

| title = The Bank, the Fund, and the GATT: Which Institution Most Supported Developing-Country Trade Reform?

| journal= World Trade Review

| volume=22

| issue=3–4

| publisher = Cambridge University Press

| date= 2023

| doi=10.1017/S1474745623000198

| doi-access= free

}}

* Rodríguez, Francisco; and Rodrik, Dani (1999), ''Trade Policy and Economic Growth: a skeptic’s guide to the cross-national evidence'', Centre for Economic Policy Research Discussion Paper No. 2143, May 1999

* Rodrik, Dani (2001), ''The Global Governance of Trade As If Development Really Mattered'', October 2001, United Nations Development Programme