World Trade Organization (WTO)
A. Pursuing inclusive broad-based growth that delivers opportunities for all and ensures that no one is left behind
Trade is recognized as an engine for inclusive economic growth and poverty reduction that contributes to the promotion of sustainable development both by the 2030 Agenda and its accompanying Sustainable Development Goals, as well as, the Addis Ababa Action Agenda on Financing for Development. Accounting for more than 50% of low-income countries' GDP, international trade can be an important source of finance to both the private sector and the public sector in developing countries. Trade growth enhances a country’s income generating capacity, which is one of the essential prerequisites for achieving sustainable development.
Trade has played an enormous role in eradicating poverty and promoting prosperity in the developing world. In 1990, more than half the citizens of developing countries lived on less than US$ 1.25 a day. By 2015, that rate had dropped to 14%. Without trade, these remarkable improvements would never have been achieved. Since 2000 alone, the developing country share of world trade has increased from 33% to 48%. In commercial services trade, the share has risen from around 25% to roughly 35% over the same period. And South-South trade has also grown in importance, accounting for 52% of developing countries' exports in goods in 2013.
Among the various benefits of trade is that it improves both consumer choice and the prospective competitiveness of domestic firms. This is because a household's welfare depends on the diversity, quality and price of the products it can purchase; similarly, in today's global production networks, a firm's capacity to export increasingly depends on access to competitive inputs. An increase in exports enhances the country’s income growth at least at the aggregate level. Market access conditions, both foreign market access for a country’s exports and domestic market access for imports, are thus an important determinant of the effectiveness of trade as a means of implementation. A predictable trading environment can also help to promote long term investments that could further enhance the productive capacity of a country.
Trade and investment are important ingredients for global economic integration, growth and prosperity. Trade accounts for a significant share of low-income countries' GDP and is a significant source of finance to both the public and private sectors to implement the Sustainable Development Agenda.
Another substantial source of finance is Foreign Direct Investment, and naturally the two are very closely interrelated. For example, services trade now accounts for almost two thirds of global inward FDI stock. And FDI is fundamental because it is the main vehicle for the supply of services in foreign markets. It is critical in enabling global supply chains to function properly. Therefore, more open trade policies can boost FDI and strengthen a positive relationship between the two.
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