It is my pleasure to address the Aid For Trade Stocktaking Event. We meet at a particularly important time. As we were starting the “Decade of Action” for the 2030 Agenda, the COVID-19 crisis sent us back almost a decade in terms of development progress.
Indeed, we estimate that the annual SDG financing gap in developing countries increased by 50% in 2020. Moreover, inequalities have increased. It is expected that income levels for women will fall by 50 percent more than for men as a result of the crisis. While children worldwide were forced to home-school for much of 2020, nearly 90% of students in sub-Saharan Africa were without access to household computers and 82% are unable to connect online.
We are far from equal in the face of the pandemic and the recovery; our latest Global Outlook on Financing for Sustainable Development finds that recovery spending in developing countries was USD 1 trillion less than in OECD countries in 2020.
In the absence of fiscal space in many countries which face debt problems, restarting the trade and investment pump will be essential to the recovery. In this respect, Aid For Trade should be a focus of our official development assistance (ODA) efforts and should be revisited to better respond to the ambitions of the 2030 Agenda and to the arising challenges and priorities of the COVID-19 era.
Looking ahead there are four concrete points we identify where the role of trade is important in helping economies better exit the crisis.
First, we must understand that trade has been the glue holding the world economy together. Despite tremendous stress, global value chains have shown remarkable resilience and proven crucial in dealing with the pandemic by scaling up production and distributing supplies.
Medical goods trade increased 16% in the first half of 2020. We need to continue to work to support resilient value chains – from raw materials used in the manufacturing of drugs to the patients benefitting from them. The Aid for Trade programmes can do precisely that: help countries implement the necessary trade facilitation measures and information-sharing that supports resilient trade.
Second, while trade in world goods is rebounding, the recovery of services trade remains mixed. Sectors, such as travel, tourism, and transport services have been devastated, with a particular effect on developing economies. Transport services declined by 24% and travel services by 68% in 2020, affecting most middle-income countries or small island developing states, which are heavily reliant on tourism.
Other services, however, including digital transactions and their key enabling sectors have surged - for example, computer services trade was up by +9% in 2020 - , partly mitigating the impact of the crisis. Given the preponderance of low-wage workers in services, a rebound in services trade will be necessary to foster an inclusive and sustainable recovery.
Third, digital trade can play an important role in building back better. This crisis has accelerated the digital transformation, underscoring its importance for sustaining well-being, and speeding up the recovery. But it has also underscored the need to address existing digital divides to ensure that the gains from digitalisation can be realised, and more widely shared across countries and societies.
Last but not least, governments should seize current opportunities to incorporate climate friendly policies into their recovery plans. Opening trade creates opportunities for diffusion of environmental technologies as well as wider availability of environmental goods and services. It also improves supply security of inputs that are key to energy transition, enabling economies of scale to support moves to a circular economy.
What the pandemic made clear to us, is that we must ensure that trade and investment provide maximum development footprint in partner countries. The ultimate shock of the COVID-19 crisis will be poverty. And programmes like Aid for Trade are essential to build forward better.
Without a sustained trade and investment flow, the strong, resilient, inclusive and green recovery we strive for will not be realised. As we forge ahead, only by working together with the right political leadership, will we be able to tackle the challenges ahead. You can continue to count on the OECD to stand by you and support you every step of the way.