The World Trade Organization’s chief economist, Ralph Ossa, emphasized that merely reducing trade barriers will not ensure inclusivity in the global economy. He stated that true inclusiveness requires a comprehensive strategy that not only promotes open trade but also includes supportive domestic policies and robust international collaboration.
Ossa made these remarks during the launch of the 2024 World Trade Report at the start of the 2024 WTO Public Forum in Geneva, Switzerland, attended by representatives from various member countries. He pointed out that the report highlights the significant number of economies and individuals still being left behind in the global economic landscape.
He noted that income growth has not been uniform across economies, with one-third of low and middle-income countries, which constitute 13 percent of the global population, experiencing slower growth compared to their high-income counterparts. This disparity has resulted in divergence rather than convergence among these economies, primarily located in Africa, Latin America, the Caribbean, and the Middle East.
Ossa identified high trade costs as a key barrier to increased trade participation in these diverging economies, attributing the issue in part to restrictive trade policies, such as high compliance costs with foreign standards and inadequate implementation of trade facilitation measures. He also underscored the impact of domestic challenges, including underdeveloped infrastructure and inefficient services, on trade effectiveness.
He explained that resource-rich countries often struggle to diversify their economies beyond their primary export commodities, a situation commonly referred to as “Dutch disease.” This occurs when profitable commodity exports impede the growth of competitive manufacturing or service sectors. Additionally, barriers to foreign direct investment—including both explicit restrictions and unfavorable investment environments—exacerbate these economic challenges.
Ossa further highlighted that the gap is not just economic; many individuals also experience inequality within their countries. While there has been a slight decline in within-country income inequality over the last three decades, it remains significantly high. He acknowledged that discussions on trade and inclusivity often pivot around income inequality, noting that the relationship between trade integration and income inequality is complex; while it can increase inequality in some economies, it can reduce it in others.