The world needs fairer – not less – trade to promote shared prosperity, UNCTAD Deputy Secretary-General Isabelle Durant told participants at the largest gathering on sustainable development progress in New York recently.
The High-level Political Forum (HLPF) convened at the United Nations headquarters to take stock of the progress made on the Sustainable Development Goals (SDGs) and chart next steps towards a more prosperous world by 2030.
Geneva-based trade trio, UNCTAD, the World Trade Organization (WTO) and the International Trade Centre (ITC), told participants at the forum that trade is a powerful means for achieving the global goals.
“Trade has been a major catalyst for economic growth, both in developing and developed countries,” Durant said.
It has lifted standards of living in developing countries by improving access to food, medicines and education, among other benefits.
Bigger pie, but not divided equally
However, the benefits of global trade have not been distributed equally, Durant observed.
While the value of trade has increased fivefold and its volume fourfold for the past 30 years, the bottom 50% of the population has captured only 12% of the total economic growth, whereas the top 1% captured 27% of it.
In 1990, world trade was about US$5 trillion, whereas in 2018 its volume reached $25 trillion.
“Trade has contributed to make the pie bigger, but its shares have not been divided equally.”
She noted that some developing countries have benefitted from global trade, especially those in east Asia.
Many countries in Africa and Latin America, and small island developing states (SIDS), have not been so well served.
In many of these countries, economic growth has been lower than expected, with most gains from trade being captured by a small segment of the population.
But rising inequality within countries has not been limited to developing countries.
“In many developed economies too, globalization has benefited some more than others, rendering their middle class fragile.”
Globalization has therefore led to the marginalization of some regions, some firms and some workers.
Good policies are the difference
But rising inequality is not inevitable in the face of globalization, good policies can make a difference in making trade more inclusive, Durant said.
“Strengthening the multilateral trading system to make it more open, transparent and equitable could contribute to shared prosperity globally.”
It was the first time the three Geneva-based trade organizations jointly informed the HLPF on the critical role of trade in fostering sustainable development.
UNCTAD is prioritizing the fight against inequality.