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Trade's role in economic growth weakened in 21st century - Report

Trade's role in economic growth weakened in 21st century - Report
The International Monetary Fund - (Photo Credit: Arabianeye-Reuters)

Mubasher: The role of trade in the global economy is at a critical juncture due to the slowing reforms in the last 17 years, according to a joint report published on Monday by the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO).

“A slowdown in the pace of trade reform, a post-crisis uptick in protectionism, and risk of further reversals have been a drag on trade, productivity, and income growth.”

“At the same time, trade is leaving too many individuals and communities behind, notably also in advanced economies,” the report noted.

“The rapid pace of trade opening from the late 1980s to early 2000s has slowed sharply in recent years, even as trade restrictions in some areas remain high and the stock of new restrictions put in place since the global financial crisis continues to grow.”

Tariffs have declined considerably, but with little recent progress they remain high for some products in some countries, the report added.

Moreover, cuts in applied tariff rates have not been locked in by corresponding reductions in the World Trade Organization (WTO).

“Improved domestic policies and further trade reform can stimulate growth that is more inclusive,” the report indicated.

The report also called upon an early action to improve labour mobility, by reducing the impediments to workers moving across firms, industries, and locations.