The World Bank on Tuesday approved a US$27 million project to support the construction of a 7 Mega Watts small geothermal power plant in Dominica; the aim of which is to increase the share of renewables, diversify the country’s energy matrix, and identify a clear road map for private sector investment in geothermal development.Continue reading
- Caroline Freund and Robert Koopman
Caroline Freund, a former senior fellow at the Peterson Institute for International Economics, is Director of Trade, Regional Integration and Investment Climate at the World Bank. Robert Koopman is Chief Economist and Director of the Economic Research and Statistics Division of the World Trade Organization.
WASHINGTON, DC – Just when poverty-reduction efforts around the world were already slowing, recent forecasts indicate that the global economy is heading into a period of deepening uncertainty. That makes measures to boost growth and expand economic opportunity all the more urgent – which is why revitalizing trade must be high on the global policy agenda. The evidence is clear: as an engine of economic growth and a critical tool for combating poverty, trade works.
With today’s trade tensions, it is easy to lose sight of the progress the world has made over the past few decades of economic integration. Since 1990, more than one billion people have lifted themselves out of poverty, owing to growth that was underpinned by trade. And today, countries are trading more and deepening economic ties even faster than in past decades. There are currently more than 280 trade agreements in place around the world, compared to just 50 in 1990. Back then, trade as a share of global GDP was around 38%; in 2017, it had reached 71%.
Open trade is particularly beneficial to the poor, because it reduces the cost of what they buy and raises the price of what they sell. As new research from the World Bank and the World Trade Organization makes clear, farmers and manufacturing workers earn more income when their products can reach overseas markets.
In Vietnam, for example, a series of trade reforms in the 1980s and 1990s helped transform the country into an export powerhouse, sharply reducing poverty there. Today, Vietnam’s exports generate 30% of its enterprise-sector employment; and its trade-to-GDP ratio – a key indicator of an open economy – is approximately 200%, the highest among all middle-income countries.
Likewise, a separate study of manufacturing in 47 African countries found that employees at export-oriented firms earned 16% more than workers at non-exporting firms. And while men and women working at trading firms received similar wages, men at non-trading firms earned more than women.
Evidence like this demonstrates the promise of open trade. But the poor do not benefit from trade automatically. In fact, our research points to serious challenges. For example, some groups of workers may lose income as a result of increased import competition. And others will encounter “behind the border” barriers – such as limited competition in transportation and distribution, weak infrastructure, or lack of information about new opportunities – that can negate the benefits of trade.
Finally, our research shows that trade can have an uneven impact on the poor, depending on specific circumstances such as one’s access to trade-supporting infrastructure, one’s gender, or whether one lives in a rural or urban area. Such dynamics are clearly discernible in India, where goods produced in rural households face a tariff rate in international markets that is 11 percentage points higher than that for goods produced in urban households.
Similarly, on the border of Laos and Cambodia, women pay higher taxes to customs officials, and their goods are more likely to be quarantined than those that are traded by men. In Uganda, where 70% of the population is employed in agriculture, the low quality and high cost of transportation prevents most producers from getting their products into the hands of foreign customers.
With appropriate trade reforms, governments can loosen such constraints, while also lowering transaction costs, promoting competition, and setting clear rules for cross-border commerce. We know that open trade can drive development. But passively counting on exports to boost economic growth and reduce poverty is not enough. We need to push harder for reforms to lower tariff barriers and remove trade-distorting regulatory measures. And more must be done to facilitate investment in infrastructure such as roads, shipping routes, and e-commerce systems that connect people to markets.
Unfortunately, recent WTO forecasts show that the growth of global trade is slowing, imperiling prospects for faster economic growth and poverty reduction. We urgently need to address the roots of global trade tensions, strengthen the rules-based trading system, and pursue further trade liberalization. Experience shows that this is the most effective way to drive inclusive and sustainable economic growth, create new opportunities, and bring us closer to our shared goal of finally ending extreme poverty.
Caroline Freund, a former senior fellow at the Peterson Institute for International Economics, is Director of Trade, Regional Integration and Investment Climate at the World Bank.
Robert Koopman is Chief Economist and Director of the Economic Research and Statistics Division of the World Trade Organization.
Copyright: Project Syndicate, 2019.
The following is a message from the United Nations Secretary General, Antonio Guterres in observance of International Women’s Day – March 8th, 2019.
Gender equality and women’s rights are fundamental to global progress on peace and security, human rights and sustainable development. We can only re-establish trust in institutions, rebuild global solidarity and reap the benefits of diverse perspectives by challenging historic injustices and promoting the rights and dignity of all.
In recent decades, we have seen remarkable progress on women’s rights and leadership in some areas. But these gains are far from complete or consistent – and they have already sparked a troubling backlash from an entrenched patriarchy.
Gender equality is fundamentally a question of power. We live in a male-dominated world with a male-dominated culture. Only when we see women’s rights as our common objective, a route to change that benefits everyone, will we begin to shift the balance.
Increasing the number of women decision-makers is fundamental. At the United Nations, I have made this a personal and urgent priority. We now have gender parity among those who lead our teams around the world, and the highest-ever numbers of women in senior management. We will continue to build on this progress.
But women still face major obstacles in accessing and exercising power. As the World Bank found, just six economies give women and men equal legal rights in areas that affect their work. And if current trends continue, it will take 170 years to close the economic gender gap.
Nationalist, populist and austerity agendas add to gender inequality with policies that curtail women’s rights and cut social services. In some countries, while homicide rates overall are decreasing, femicide rates are rising. In others we see a rollback of legal protection against domestic violence or female genital mutilation. We know women’s participation makes peace agreements more durable, but even governments that are vocal advocates fail to back their words with action. The use of sexual violence as a tactic in conflict continues to traumatize individuals and entire societies.
Against this backdrop, we need to redouble our efforts to protect and promote women’s rights, dignity and leadership. We must not give ground that has been won over decades and we must push for wholesale, rapid and radical change.
This year’s theme for International Women’s Day, “Think Equal, Build Smart, Innovate for Change”, addresses infrastructure, systems and frameworks that have been constructed largely in line with a male-defined culture. We need to find innovative ways of reimagining and rebuilding our world so that it works for everyone. Women decision-makers in areas like urban design, transport and public services can increase women’s access, prevent harassment and violence, and improve everyone’s quality of life.
This applies equally to the digital future that is already upon us. Innovation and technology reflect the people who make them. The underrepresentation and lack of retention of women in the fields of science, technology, engineering, mathematics and design should be a cause of concern to all.
Last month, in Ethiopia, I spent time with African Girls Can Code, an initiative that is helping to bridge the digital gender divide and train the tech leaders of tomorrow. I was delighted to see the energy and enthusiasm these girls brought to their projects. Programmes like this not only develop skills; they challenge stereotypes that limit girls’ ambitions and dreams.
On this International Women’s Day, let’s make sure women and girls can shape the policies, services and infrastructure that impact all our lives. And let’s support women and girls who are breaking down barriers to create a better world for everyone.
A team of experts from the International Financial Corporation (IFC) is on a fact-finding mission in Grenada ahead of the country’s plans to set up a teaching hospital. Continue reading