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Development

Launch OECD/WTO publication Aid for Trade at a Glance: ‘Economic Diversification and Empowerment’

 

Remarks by Angel Gurría

OECD Secretary-General

03 July 2019 - Geneva, Switzerland

(as prepared for delivery)

 

 


Honourable Ministers, Excellencies, Dear Roberto, Dear colleagues,


It is my great pleasure to be back in Geneva for the launch of the seventh OECD-WTO Aid for Trade at a Glance report, prepared jointly by the OECD and the WTO, with insightful contributions from United Nations specialised agencies and the World Bank.


Since 2007, successive editions of this ever-expanding flagship publication have shed light on the steps that developing countries and their development partners are taking to make trade work for sustainable development. This 2019 edition focuses on the core issues of economic diversification and empowerment, demonstrating how they have rapidly become key objectives of countries’ trade and development strategies. Before I go into some of the main insights of the report, let me provide some context on where we stand today.

 

Important progress has been made 

The good news is that we are making progress. Since the start of the Aid for Trade Initiative in 2006, donors have disbursed USD 409 billion in official development assistance to help developing countries build trade capacities and trade related infrastructure. In addition, USD 346 billion in low concessional loans was disbursed. Per capita, the poorest developing countries get more than double the support of the richer developing countries.


The report that we are launching today also shows that, on average, aid for trade has grown 12% annually. Its share in total sector aid increased from 30 to 40%; resulting in USD 75 billion additional aid for trade. In 2017, donors committed more than USD 110 billion in Official Development Finance. South-south providers contributed USD 9 billion, although most of their support is not reported comprehensively.


Last but not least, growth in manufacturing and related services has absorbed large numbers of workers and has contributed greatly to their prosperity. However, the very nature of manufacturing is changing rapidly due to automation and digitisation of production processes and additional persistent challenges threaten to derail the progress achieved thus far.

 

Yet challenges persist

Economic diversification holds great potential to increase resilience and contribute to achieving and sustaining long-term economic growth and development. Broad-based economies, active in a wide range of sectors, and firmly integrated into the global economy, are better able to generate robust and sustainable growth.


However, the path towards economic diversification is becoming increasingly complex due to subdued trade growth and foreign direct investment. In addition, trade tensions and renewed calls for protectionism hit the most vulnerable hardest. In particular, the least-developed, the landlocked, the Small Island Developing States, and fragile states. These countries can ill afford the cost of global uncertainties. They urgently need to raise export competitiveness so that trade can benefit marginalised groups, in particular youth and women.

 

The OECD/WTO Aid for Trade at a Glance report

The report we are launching here today takes stock of these issues and puts forward a number of recommendations which focus on promoting empowerment and economic diversification.


If we are to achieve any progress at all, we must focus on the economic empowerment of women and youth – an issue that remains high on the 2030 Agenda for Sustainable Development. Youth are a large and growing proportion of the population in many developing countries and they are three times more likely than adults to be unemployed. To promote empowerment effectively, aid programmes need to focus more explicitly on helping developing countries create extra opportunities for women and youth, particularly in sectors such as manufacturing but also in banking, transport and energy.


In addition, women’s empowerment can be advanced when we act decisively in tackling entrenched gender gaps, including by fighting discriminatory social norms and institutions. While youth employment and entrepreneurship can be harnessed by improving skills and the business ecosystem.


The economic empowerment of SMEs is also a crucial factor. As such, the entry into force of the WTO Trade Facilitation Agreement in 2017 has created a momentum that is helping to level the playing field between large and small firms. This is being achieved by improving the environment that SMEs face in the exporting markets and in the origin economies of their imported inputs. According to partner countries, aid for trade facilitation appears as one of the best ways to support the economic empowerment of SMEs and to promote economic diversification.


Looking forward, the report highlights actions in several areas. For example, we must pay greater attention to the social and environmental impact of economic diversification. For that to happen we need: better incentive frameworks to attract more and better private investments; targeted social policies to support the reallocation of resources; government interventions that address market, policy and institutional failures; and we need to continue with policy reforms that are targeted at reducing trade costs. And this needs to be coupled with better access to infrastructure and health.

 

Ladies and Gentlemen,


Economic diversification and empowerment are crucial in our increasingly interconnected and interdependent world. They create opportunities for those left behind, they break down economic and social barriers and they promote sustainable and inclusive growth. Our joint work here today demonstrates that the only way forward is by ensuring all stakeholders are involved – not through protectionism and silo approaches.


So let’s continue to work together and to design develop and deliver better policies for better lives. Thank you.

 

 

See also:

OECD work on Aid for Trade

 

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