The World Trade Organization (WTO) chief economist, Ralph Ossa, emphasized that reducing trade barriers alone will not lead to inclusiveness. At the unveiling of the 2024 World Trade Report during the 2024 WTO Public Forum in Geneva, he stated that true inclusiveness requires a holistic approach that combines open trade with supportive domestic policies and robust international collaboration.
Ossa highlighted a critical finding of the trade report, indicating that a significant number of economies and individuals continue to be marginalized. He noted, “Income convergence has been uneven, leaving some economies behind. One-third of low and middle-income economies, which represent 13 percent of the global population, grew at a slower pace than high-income economies, resulting in divergence rather than convergence.”
According to Ossa, most of the economies experiencing divergence are situated in Africa, Latin America, the Caribbean, and the Middle East. He pointed out that high trade costs significantly contribute to the limited trade engagement seen in these diverging economies. He attributed some of these issues to trade policies, such as high compliance expenses related to foreign standards and the incomplete enforcement of trade facilitation measures.
He further stressed that domestic challenges, including inadequate physical infrastructure and inefficient services, play a crucial role in obstructing trade. Resource-rich countries often struggle to diversify their economies beyond their primary export commodities, facing a situation known as “Dutch disease,” where lucrative commodity exports hinder the growth of competitive manufacturing, agriculture, or services.
Ossa also addressed the barriers to foreign direct investment (FDI), including both explicit limitations and less tangible issues like a negative investment environment, which further complicate these challenges.
He pointed out that not only are too many economies being left behind, but so are many individuals. He remarked on the significant within-country income inequality that persists, despite a slight decline over the past 30 years. This situation has led to discussions linking trade to income inequality, although Ossa noted that trade integration does not consistently correlate with income inequality, as it can enhance inequality in some contexts while reducing it in others.