The IMF has published a working paper, a research by Marc Bacchetta, Valerie Cerra, Roberta Piermartini and Maarten Smeets which is based on a survey of "conflicting literature" on the relationship between trade and inclusive growth, which finds that "More can be done to foster more inclusive trade«. Based on some studies showing aggregate benefits of trade, and others pointing to adverse impacts, the authors identify policies that can improve trade.
El study examines the relationship between international trade and inclusive growth: trends and the changing composition of trade by country and industry. Pointing to the net benefits added to trade activity, the paper cites empirical evidence finding that, in general, trade openness is positively correlated with per capita income, poverty reduction, economic growth and employment, and that trade liberalization leads to lower prices and a greater variety of consumer goods. From a gender perspective, the authors point to better economic outcomes and greater bargaining power for women.
Nonetheless, The analysis recognizes that these benefits are distributed unequally. across sectors, firms, regions and workers, and that trade integration has negatively affected a number of industries and localities. Furthermore, job losses due to import competition have had profound and long-lasting economic and social consequences, including side effects such as negative health outcomes and higher mortality rates. The authors note that in both emerging and advanced economies, the adverse impacts of trade depend on a region's exposure to import competition.
Therefore, The paper emphasizes that policy intervention is necessary to mitigate adverse impacts., especially among disadvantaged groups. And it reviews the evidence for the use of trade and other complementary policies as a means of sharing trade gains and compensating groups that have been adversely affected. Trade facilitation, for example, can play a key role in reducing transaction costs and enabling small and medium-sized enterprises (SMEs) to overcome barriers to entry, such as the relatively high fixed costs posed by tariffs.
Trade-related policies to offset negative impacts They include reducing tariffs between countries, which the authors describe as “an essential element for inclusive growth.” The paper highlights that tariff barriers are inversely related to income and are higher for women, those in the informal sector and those living in rural areas. Trade barriers can also represent obstacles to increasing farmers’ productivity in countries with large rural and poor populations, the report notes. While specific provisions addressing inclusiveness are an increasingly common element of regional trade agreements, the authors note that little is known about the actual effectiveness of such provisions.
Complementary policies are emphasized as critical factors "behind the border", as poor people, women and SMEs face constraints related to access to finance, education and technology. Among other factors, the authors highlight high internal transport costs and lack of competition in the distribution sector as reducing the benefits of trade that flow to the poor.
For all the above, The authors stress that action at the multilateral level can also enhance inclusion. by addressing market distortion and access to its benefits, and by reducing price volatility. In this regard, The document emphasizes the role of the World Trade Organization (WTO) "plays a role in underpinning an open and inclusive global trading system."
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