World Report Trade and development: 2014 recent trends and the role of the WTO

How do 4 recent major economic trends change how developing countries can use trade to facilitate their development?

•• the rise of the developing world •• the higher of •• the expansion of global chains •• the increasingly global nature of macroeconomic shocks

And what role does the WTO play?

WTR_2014_promo_flyer_A4_7509_14_E.indd 1 13.10.14 13:03 II – Trade and developmenT: recenT Trends and The role of The WTo II B. B. II T of develop The I The he glo he ncreas B al economy I ng coun I ng I ng mpor T r T I ance ance Key facts and fi ndings I es n

The increasing importance of developing countries in the global economy

• Since 2000, GDP per capita of developing countries has • GDP growth has moved hand in hand with integration in grown by 4.7 per cent, while developed countries only the . The share of developing economies grew by 0.9 per cent. This has narrowed differences in in world output increased from 23 per cent to 40 per cent GDP per capita between countries. However, developing between 2000 and 2012 in parity economies are still much poorer than developed countries, terms. The share of developing countries in world trade and millions remain in poverty even in the most dynamic also rose from 33 per cent to 48 per cent. developing countries.

Figure B.9: Shares of selected economies in world GDP at , 2000–12 Shares(percentage) of selected economies in world GDP at purchasing power parity, 2000–12 (percentage)

2000 2012 Other Other developing, 13% developing, 15% South , 1% LDCs, 1% , 1% LDCs, 2% , 1% Argentina, 1% , Kingdom of, 1% Saudi Arabia, , 1% Kingdom of, 1% United European , 1% Turkey, 1% States, Other Union (27), Other Korea, Rep. of, 2% Indonesia, 1% 20% developing, 25% developing, , 3% 13% Korea, Rep. of, 2% 15% G-20 Russian Federation, 3% Mexico, 2% G-20 Developed, Developed, developing, developing,48% , 3% 25% 61% Brazil, 3% 36% European , 4% Russian Federation, 3% Union (27), , 7% United India, 6% 19% Other developed, 5% States, 24% China, 15% , 6% Japan, 8% Other developed, 4%

Source: IMF World Economic Outlook database, October 2013. II. Trade and developmenT: recenT Trends and The role of The WTo

The rise of global value chains (GVCs)

• Fragmentation of global production has accelerated and increasingly involves developing countries. More than Imports of parts and components by country group, 1996–2012 (US$ billion) half of developing countries’ total in value-added terms are now related to GVCs and the share of GVC-

based trade between developing countries quadrupled 3,000 13 over the last 25 years.

2,500 • GVC participation leads to productivity enhancements

through technology and knowledge transfers. Countries 2,000 with greater GVC participation have higher growth B_WTO_WTR_2014_BAC1405B0037.indd 13 06/08/2014 7:02:43 PM rates. However, participation in GVCs may involve risks. 1,500 For example, while it may make industrialization easier

to achieve, can become more 1,000 fl eeting, increasing vulnerabilities to relocation of fi rms.

500 • Countries with a favourable business environment and

low tariffs participate to a greater extent in GVCs. Aid 0 for can help address some obstacles, such as lack of infrastructure and customs barriers. GVCs 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20

are associated with “deep integration” agreements: C.

more than 40 per cent of agreements in force Developed G-20 developing Other developing valu global of RISE THE

today include provisions related to policy, Source: UN Comtrade database, WTO Secretariat. E CH , standards and intellectual property rights. a I n S

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C_WTO_WTR_2014_BAC1405B0037.indd 5 07/08/2014 5:04:40 PM world trade report 2014 A new role for commodities in development Quarterly merchandise exports per region, 2007Q1–2013Q2 (Year-on-year percentage change in US$ values)

• Prices of food, energy, metals and minerals roughly 80 doubled since 2000. Despite a slight moderation from 2008 peaks, strong demand from large developing 60 countries is among the reasons to believe that the high- 40

environment may stay. Price will also 20 likely continue to characterize markets. 0

• Developing countries increased their share –20

in global agricultural exports from 27 to 36 per cent –40 between 2000 and 2011. But traditional market access –60 barriers such as tariffs and subsidies continue to affect their exports and non- measures are playing an 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 World Commonwealth of Independent States South and increasingly important role. Others

Source: WTO short-term merchandise trade statistics. • Trade in natural resources has also grown strongly Notes: Data are not seasonally adjusted. since 2000. Several resource-rich countries have achieved high growth, but the social and environmental impacts of extraction remain signifi cant challenges. The WTO and developing countries

• Commitments are a key feature of Real annual price indexes of selected commodities, 2000-13 (2000=100, real 2005 US$) agreements. Countries undertaking substantial reforms related to WTO accession been found to grow about 2.5 per cent faster for several years. 300 250 • As long as certain market failures persist, rule-based 200

150 fl exibilities are important to allow developing countries 100 to undertake such commitments. In the WTO system, 50 these countries benefi t from special and differential 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 8 (S&D) treatment by providing less-than-full reciprocity

Food Energy Metals and minerals for trade concessions and through other fl exibilities. Source: Commodity Price Data.

E_WTO_WTR_2014_BAC1405B0037.indd• The 8 Committee on Trade and Development is the focal 30/06/2014 6:04:05 PM point on development issues in the WTO. It considers Increased synchronization and globalization concerns raised by developing countries, promotes

of macroeconomic shocks transparency and oversees the implementation of WTO trade-related technical assistance. • During the global crisis of 2008-09, trade declined • At the Bali Ministerial Conference in December 2013, in a rapid and synchronized manner not observed WTO members reinforced the development dimension before. It illustrated the dependency of countries on of the WTO. economic developments elsewhere. Macroeconomic volatility, which previously had been declining, can set • Trade and the WTO will have a central role to play in back development by reducing and addressing development challenges post-2015. adversely affecting income .

• A coordinated international response, the existence of trade rules and the effectiveness of monitoring efforts by the WTO restrained , despite the severity of the global economic crisis.

WTR_2014_promo_flyer_A4_7509_14_E.indd 3 13.10.14 13:03 World Trade Report 2014

The World Trade Report 2014 looks at four major trends that have changed the relationship between trade and development since the start of the millennium: the economic rise of developing economies, the growing integration of global production through supply chains, the higher prices for agricultural and natural resources, and the increasing interdependence of the world economy. Many developing countries have experienced unprecedented growth and have integrated increasingly into the global economy, thereby opening opportunities for countries still lagging behind. However, important barriers still remain. Integration into global value chains can make industrialization in developing countries easier to achieve. Upgrading to higher-value tasks within these supply chains can support further growth. But competitive advantage can be lost more easily, and achieving such upgrading can be challenging. Higher prices for agricultural goods and natural resources have helped some developing countries achieve strong growth. But higher prices can cause strains for importers of these goods. Growing interdependence within the global economy allows countries to benefi t more quickly from growth in other parts of the world. But it can also cause challenges as crises can be quickly transmitted across borders. Many developing countries still have a long way to go in addressing their development challenges. The multilateral trading system provides developing countries, and particularly least-developed countries, with unique opportunities to do so. Further progress in the Post-Bali Agenda would therefore be important to making trade work more effectively for development.

“This year’s World Trade Report shows that four recent trends have reshaped the relationship between trade and development. Many developing countries have taken advantage of the new opportunities, experiencing rapid economic growth alongside deepening trade integration, lifting millions of people out of poverty. The open, non-discriminatory, rules-based multilateral trading system, as embodied in the WTO, has been important in underpinning their success. But the recent trends also hold challenges and a long road still lies ahead for many developing economies. The WTO’s work is therefore more important than ever. The decisions taken by WTO members in Bali last year can help poor countries realize their potential. We now need to implement those decisions and continue to advance trade negotiations at the WTO.” Roberto Azevêdo WTO Director-General

Further information

The World Trade Report is an annual This Report is available electronically at WTO Online Bookshop publication that aims to deepen www.wto.org. http://onlinebookshop.wto.org understanding about trends in trade, trade Print copies may be purchased for 60 CHF.- WTO Bookshop in Geneva policy issues and the multilateral trading www.wto.org/bookshop system. To order, please contact: WTO Publications The Report is available in English, French WTO books may also be ordered from: and Spanish: 154, rue de Lausanne Turpin Distribution Services Ltd. World Trade Report 2014 CH-1211 Geneva 21 Pegasus Drive, Stratton Business Park ISBN 978-92-870-3912-5 Biggleswade, Bedfordshire, SG18 8TQ Rapport sur le commerce mondial 2014 Tel: +41 (0) 22 739 53 08 ISBN 978-92-870-3913-2 Fax: +41 (0) 22 739 57 92 Tel: +44 (0) 1767 604975 Informe sobre el Comercio Mundial 2014 [email protected] Fax: +44 (0) 1767 601640 ISBN 978-92-870-3914-9 [email protected] www.turpin-distribution.com http://ebiz.turpin-distribution.com

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