Trade Policy in a Global Age
More and more of the world’s economic activity is now organised through global value chains (GVCs) and strategic networks. However, the World Trade Organization (WTO) and its Members remain preoccupied with the removal of barriers to trade introduced in the early 20th century. That focus inhibits the WTO’s ability to turn to the challenges that a more networked global economy presents.
Globalisation has fundamentally altered the way we trade, the way production is organised, and the basis of competition in the international economy. The rise of GVCs represents an integral part of that process. Accordingly, a trade policy that focuses exclusively on reducing tariffs, and implicitly defines market access in terms of lowering such barriers in a particular “export market,” risks marginalising itself and the WTO in the process. What matters more is improving the institutions and building the capacity, whether as a firm or as a nation, that facilitate participation in the more networked world economy of which GVCs are a part.
The nature of what is needed comes closer to the structural adjustment lending the World Bank did as its contribution to resolving the various debt and financial crises affecting the developing world in the 1980s and 1990s. But the structural adjustment in this instance would involve policy reforms aimed at enabling local firms and workers to engage successfully in the global economy. That agenda could embrace financing for hardware (physical infrastructure) and software (institutional change).
Tag: Capacity Building, Diversification & Competitiveness, Finance and Development, Functioning of the WTO, Global Trade & Investment Architecture, Global Value Chains, Negotiations, Regional/Bilateral/Plurilateral, Tariffs