Economic research and trade policy analysis

The development and deployment of artificial intelligence (AI) have accelerated in the last few years, and its applications hold the potential to revolutionize human society and economic activities.

This chapter provides a detailed economic analysis of the transformative potential of AI, focusing on its impact on trade and inclusive growth.

Alongside the scramble for critical goods such as personal protective equipment (PPE), the early stages of the pandemic saw an urgent need for accurate and credible information, a necessity for governments across the world confronted with an unprecedented global threat, not only to human health but also to economic and social well-being.

Effective engagement with the multifaceted challenges of the pandemic required the WTO to undertake extensive cooperation, both with established international partners and with new partners, including the creation of new cooperative arrangements.

The June 2022 Pandemic Declaration, adopted when the pandemic remained an international health emergency, was a historic development, a unanimous statement responding to a current crisis affecting communities in all members and observers and resulting from members’ input from across the spectrum.

The paper discusses the efforts deployed in 2008 and 2009 by various players, Governments, multilateral financial institutions, regional development banks, export credit agencies, to mobilize sufficient flows of trade finance to off-set some of the “pull-back” by commercial institutions in the period of acute crisis that has characterized the financial sector in the past two years. Given that 80 to 90% of trade transactions involve some form of credit, insurance or guarantee, one can reasonably say that supply-side driven shortages of trade finance have a potential to inflict further damages to international trade. As an institution geared towards the balanced expansion of world trade, the WTO had been concerned with occurrences of market tightening throughout this period. While a number of public-institutions mobilized financial resources for trade finance in the fall of 2008, this has not been enough to bridge the gap between supply and demand of trade finance worldwide. As the market situation continued to deteriorate in the first quarter of 2009, G-20 leaders in London (April 2009) adopted a wider package for injecting additional liquidity and bringing public guarantees in support of $250 billion of trade transactions in 2009 and 2010. Ahead of the Pittsburgh Meetings, experts reported that more than the targeted amount had been mobilized. In the meantime, through the summer and the fall of 2009, the market situation seemed to have eased – although in many countries, access to trade finance by the smaller traders had become either significantly more expensive or had simply disappeared. One can expect the trade finance market to have its up and downs for some time, because lending for trade is a function of the general lending situation of commercial banks. The paper discusses longer-term initiatives aimed at improving the resilience of the trade finance market to short-term and longer-term shocks.