Development and building trade capacity

The World Trade Report 2024 was prepared under the general responsibility and guidance of Johanna Hill WTO Deputy Director-General and Ralph Ossa Director of the Economic Research and Statistics Division. Director-General Ngozi Okonjo Iweala Chief of Staff Bright Okogu and Trineesh Biswas from the Office of the Director-General provided valuable advice and guidance.

The mission of the World Trade Organization as set out in the preamble to its founding Marrakesh Agreement is to use trade as a means to raise living standards create jobs and promote sustainable development. As we mark the WTO’s 30th anniversary it is clear that members have used the open and predictable global economy anchored in WTO rules and norms to accelerate growth and development with enormous positive impacts for human well-being. At the same time many people and places have not shared adequately in these gains.

Global trade is often accused of creating a more unequal world but in fact the opposite is happening. Billions of people in developing economies are catching up to the more advanced economies as millions of people in the advanced economies continue to move ahead. This global economic convergence is only possible because the world has become more open and integrated – expanding access to new markets new technologies and new models for achieving rapid sustained and inclusive growth.

The past quarter of a century has witnessed an unprecedented level of income convergence accompanied by the integration of many developing economies into global markets. Despite this some economies have been left behind. This chapter discusses how the participation of developing economies in global trade and investment flows can accelerate structural transformation and enhance productivity growth thereby helping lowand middle-income economies to achieve the economic growth that ensures convergence with high-income economies. The chapter also examines why some economies have taken little advantage of globalization and focuses on barriers to maximizing the gains from trade participation such as trade costs and commodity dependence. Finally the chapter discusses how recent trends in the global economy are shaping future opportunities and challenges for developing economies to leverage trade and foreign direct investment for economic growth and which policies can help to achieve convergence in the upcoming decade.

Over the past 30 years the world has witnessed a period of unprecedented income convergence accompanied by a steep reduction in poverty but inequality remains high.

Never before have the living conditions and prospects of so many people changed so dramatically in the space of a few decades.

The mission of the World Trade Organization as set out in the preamble to its founding Marrakesh Agreement is to use trade as a means to raise living standards create jobs and promote sustainable development. As we mark the WTO’s 30th anniversary it is clear that members have used the open and predictable global economy anchored in WTO rules and norms to accelerate growth and development with enormous positive impacts for human well-being. At the same time many people and places have not shared adequately in these gains.

The World Trade Report has been prepared under the responsibility of the WTO Secretariat. It does not necessarily reflect the positions or opinions of WTO members and it is without prejudice to their rights and obligations under the WTO agreements.

The past quarter of a century has witnessed an unprecedented level of income convergence accompanied by the integration of many developing economies into global markets. Despite this some economies have been left behind. This chapter discusses how the participation of developing economies in global trade and investment flows can accelerate structural transformation and enhance productivity growth thereby helping lowand middle-income economies to achieve the economic growth that ensures convergence with high-income economies. The chapter also examines why some economies have taken little advantage of globalization and focuses on barriers to maximizing the gains from trade participation such as trade costs and commodity dependence. Finally the chapter discusses how recent trends in the global economy are shaping future opportunities and challenges for developing economies to leverage trade and foreign direct investment for economic growth and which policies can help to achieve convergence in the upcoming decade.

This chapter discusses how the multilateral trading system has helped some economies to take advantage of trade to further their development but has not succeeded in helping others to harness trade for growth and considers what could be done to ensure that the WTO leaves no economy behind. It also examines the effect of the WTO on how the benefits of trade are shared out within economies and discusses how the WTO and trade can be made more inclusive for people and firms. Finally the chapter outlines the areas in which work at the WTO could be coordinated with work at other international organizations to help make trade more inclusive such as by enhancing infrastructure and digital connectivity to bridge the digital gap or by ensuring coherence between trade and environmental policies.

Aid for Trade seeks to enable developing economies and in particular least-developed countries (LDCs) to use trade as a means of fostering economic growth sustainable development and poverty reduction. It promotes the integration of developing economies especially LDCs into the multilateral trading system and aims to galvanize support to build supply-side capacity and trade-related infrastructure in these economies to improve trade performance. This publication draws on the responses provided by participants to the questionnaire of the 2024 joint OECD–WTO Aid for Trade monitoring and evaluation (M&E) exercise which underpins the 2024 Global Review of Aid for Trade. It presents an analysis of the M&E questionnaire responses and provides information on Aid for Trade financing flows up to the year 2022. Drawing on the responses to the survey it describes priority areas for the Aid for Trade Initiative for 2024 and the coming years.

This publication is the result of a joint effort of the OECD and the WTO and was prepared under the overall guidance of Michael Roberts (Head Aid for Trade Unit Development Division WTO) and Olivier Cattaneo (Head of Unit Architecture and Analysis Development Co-operation Directorate OECD). WTO Deputy Director-General Xiangchen Zhang Taufiqur Rahman (Director of the Development Division WTO) and María del Pilar Garrido Gonzalo (Director for Development Co-operation OECD) supervised the work. The publication was edited and reviewed by Ross McRae and Anthony Martin of the Information and External Relations Division of the WTO and by Henri-Bernard Solignac Lecomte Head of Communications of the OECD Development Cluster. Additional contributions were provided by Masato Hayashikawa (Development Co-operation Directorate OECD).

The transition to clean energy offers opportunities for developing economies and least-developed countries (LDCs) to exploit the export potential of this transition and to accelerate their growth prospects. The WTO-led Aid for Trade initiative provides significant support to these economies to help them develop their energy sectors and transition to clean energy. However sustained support is required to ensure that firms benefit from the trade opportunities that will emerge as a result of the clean energy transition. This report highlights the role that Aid for Trade can play in mobilizing financial resources to deliver targeted assistance and to help developing economies unlock export opportunities created by clean energy. It also underlines the role of development partners in helping firms integrate into clean energy value chains by investing in the production of clean energy technologies such as green hydrogen and solar power.

The clean energy transition is critical to achieve net zero goals and is a key element of most economies’ nationally determined contributions under the Paris Agreement to keep global warming under a 1.5° Celsius threshold. The clean energy transition also has trade integration potential as it helps to advance industrial development and addresses capacity constraints in energy generation capacity.

Nearly 40 per cent of anthropogenic GHG emissions are caused by burning fossil fuels to produce electricity (IEA 2022b). Decarbonizing electricity generation is a critical step toward achieving net zero goals. Target 7.2 of the UN Sustainable Development Goals (SDGs) calls for a substantial increase in the share of renewable energy in the global energy mix by 2030 (UN General Assembly 2015).

The Agreement Establishing the African Continental Free Trade Area (AfCFTA Agreement) which has been signed by 54 out of the 55 African countries seeks to create a single continental market for goods and services and facilitate the free movement of people on the continent thereby enhancing the competitiveness of intra-African trade and boosting intra-African trade. This will generate employment and improve the welfare of mostly young men and women on the continent. However whilst the AfCFTA Agreement under Article 3(e) emphasizes that one of the general objectives of the AfCFTA is to promote gender equality experiences in other African regional economic communities have proven that gender and gender equality have not been adequately mainstreamed in implementing free trade areas which has resulted in gender inequalities in international trade and commerce. As a result of this the majority of women have been left marginalized in trade and faced with serious challenges in accessing opportunities created by regional trade agreements.

Recently the understanding that enhanced intra-regional trade among African countries could be a powerful tool in accelerating economic growth development and poverty reduction on the continent has led African leaders to place considerable importance on regional integration (Brenton et al. 2013). However tapping into the benefits of intra-African trade requires careful attention to inclusivity issues in ensuring both men and women benefit and participate equally in regional economic integration (Bussolo and and De Hoyos 2009). The decision by African heads of state to negotiate a separate Protocol on Women and Youth in Trade under the newly implemented African Continental Free Trade Area (AfCFTA) Agreement reaffirms the belief that improving women’s access to opportunities and removing barriers to their participation in international economies contributes to economic development.

There is widespread literature that illustrates the link between gender and trade as it can reveal the different roles of women and men in economic activity. Therefore trade policy can be a critical instrument for reducing or reinforcing gender inequalities.

This study looks at digitalization from a gender and development perspective. It investigates which countries and within countries which segments of the population have been able thus far to benefit from the dynamism provided by digitalization especially through e-commerce and technological advances in agriculture. The study points to digital divides between developed and developing countries as well as to other divides linked to gender age and socioeconomic factors that determine individuals’ ability to have access to digital technologies and use them in a productive and beneficial manner. The analysis zooms in on the potential opportunities that digitalization provides to women especially in the developing world and on the obstacles they face to benefit from it. The study makes a distinction between having access to technology using it and using it in a productive manner and highlights the link with gender and other gaps in society and the economy. In the conclusions the study puts forward some suggestions to help digitalization provide shared benefits and leave no one behind.

The increasing trend of the inclusion of gender equality and women’s economic empowerment concerns in the negotiation of trade agreements creates a need to strengthen informed dialogue between the public and private sectors. Trade negotiators are often not aware of the specific barriers faced by women in their various economic roles and as a result face a challenge in promoting provisions that will successfully address these barriers. At the same time the private sector is often not equipped to communicate its needs to a policy audience and identify the ways in which it can inform the negotiation processes with its information and experience. This gap can be bridged with the help of an institutionalized and structured dialogue between public and private and international organizations can provide the required institutional and structural support. The public–private coordination and exchange can also help countries – particularly developing countries – overcome the capacity gap in trade negotiations as they can benefit from the inputs coming from the private sector and experts.

The COVID-19 pandemic caused challenges to public health systems and disruptions in international trade and society. This chapter will highlight the role of regional governance in complementing international governance in responding to global crises and addressing gender issues. The discussion concentrates on the Asia-Pacific region including responses by individual economies and the regional organizations the Asia-Pacific Economic Cooperation (APEC) and the Association of Southeast Asian Nations (ASEAN). The findings show that policy measures responding to the pandemic are progressing dynamically. While policies are primarily concerned with the strength of public health systems and the stability of economic and social situations initially they will focus on answering specific groups’ needs including women’s challenges at a later stage. Besides comparing the actions between ASEAN and APEC indicates the difference in the governance approach to the trade and gender nexus; that is the human rights-based versus the economic and technical cooperation (ECOTECH)-oriented approaches. Accordingly this chapter argues that policy priority and institutional structure are crucial elements behind the diversity of regional governance on gender issues in the Asia Pacific. Finally it suggests that the experiences of Asia-Pacific regional governance facilitate the understanding of dimensional and cross-cutting gender issues and provide insights into international governance of the trade and gender nexus.

Scientific research reaffirms the importance of making trade gender inclusive and demonstrates that accelerating the gender responsiveness of trade policies improves gender equality in trade supports poverty reduction and fosters sustainable growth.

On average female workers receive a lower wage than male workers. In this chapter we analyse the potential contribution of trade policy reform to a reduction in this gender wage gap. We first establish four stylized facts: (i) tariffs are on average higher in more female labour-intensive sectors; (ii) trade costs are on average larger in female labour-intensive services than in goods; (iii) services trade restrictiveness is higher in more female labour-intensive services; (iv) trade costs associated with the need for face-to-face interaction are larger in female labour-intensive sectors.

This publication has been prepared under the overall guidance of Aik Hoe Lim of the World Trade Organization (WTO) and Roland Roesch of the International Renewable Energy Agency (IRENA).

Hydrogen produced exclusively from renewable power – known as green hydrogen – is widely recognised as a key pillar in replacing fossil fuels and decarbonizing sectors that cannot easily be electrified such as some industrial processes shipping and aviation. This publication – jointly produced by the International Renewable Energy Agency (IRENA) and the World Trade Organization (WTO) – explores how trade policies can support the development of green hydrogen markets. The publication highlights in particular how lowering tariffs on key products building reliable infrastructure realigning domestic support programmes and developing green government procurement can foster the development of green hydrogen supply chains and the transition to a low-carbon economy. International trade could also play a significant role in matching supply and demand for green hydrogen as the potential for domestic production in some economies might not be enough to satisfy domestic demand. The publication also addresses the challenges and opportunities for developing economies offered by green hydrogen and its derivatives such as green methanol and green ammonia. It underscores the importance of international cooperation and the need to align regulatory frameworks to encourage technology development enhanced transparency and market growth.

Green hydrogen has a number of uses. It can be used directly as an energy carrier and chemical input in multiple end-use applications. It can also be combined with a sustainable carbon source or with nitrogen to produce derivative compounds such as methanol or ammonia which can be used as feedstock for chemical production (e.g. plastics and fertilizers) or as sustainable fuels.

The services sector has been the main source of economic growth in recent decades. Logistics finance and information technologies are essential to the functioning of modern economies while business services healthcare and entertainment are among the world’s fastest growing sectors. This publication – co-published by the WTO and the World Bank – underlines the contribution that trade and investment in services can make to economic growth and development. It highlights in particular the importance of re-energizing international cooperation on services trade and encourages reflection on how best to mobilize assistance for developing and least-developed economies in implementing services sector reforms so that they can reap the gains from expanded trade and investment in services.

This publication is the result of a joint effort of the World Bank and the WTO. The publication was co-authored and coordinated by Martin Roy of the WTO and Pierre Sauvé of the World Bank under the supervision of Deputy Director-General Anabel Gonzalez and Xiaolin Chai Director of the Trade in Services and Investment Division at the WTO and Mona Haddad Global Director of Trade Investment and Competitiveness and Sebastien Dessus Practice Manager Trade and Regional Integration at the World Bank. The publication was edited by Ross McRae and Anthony Martin of the WTO.

Services have emerged as the driving force that is shaping the economic landscape of countries at all levels of development. They account for the largest share of global economic activity by generating more than two-thirds of GDP employ the most workers and are the source of most new job creation especially for female and young workers. At the same time services trade has turned into a key element in growth strategies becoming the most dynamic component of global trade in recent times and creating higher value-added jobs.

This report is published in the context of the joint OECD-WTO Aid for Trade Monitoring and Evaluation exercise which underpins the WTO’s 8th Global Review of Aid for Trade on “Empowering Connected Sustainable Trade” (July 2022). This is the eighth volume of the Aid for Trade at a Glance series.