Publications /
Policy Brief

Back
Diversification and the World Trading System
Authors
Mohammed Al Doghan
Muhammad Bhatti
Carlos Braga
Abdulelah Darandary
Anabel González
Niclas Poitiers
September 15, 2020

Diversification is important because it is associated with economic growth and reduced volatility. Diversification of exports, which provide foreign exchange and enable imports of critical goods, services, and know-how, is crucial for developing countries. The question we address in this brief is how export diversification is affected by trade policies, including multilateral rules, regional trade agreements, and national measures. The record on diversification is poor across a large number of developing countries, especially in Africa, the Middle East, and Latin America. Asian and Eastern European countries have performed better. Though diversification first requires domestic reforms, the current trading system does not help. The world trading system does not support developing countries with export diversification; moreover, the situation is deteriorating. To promote export diversification in developing countries and to sustain long-term global growth, the Group of Twenty (G20) must restore the credibility of the rule-based system. Reducing tariffs and tariff escalation in labor-intensive manufactures is critical. In many developing countries, the diversification potential for agriculture is severely impeded by subsidies, tariff barriers, and protectionist standards. Individual countries can take many steps to foster export diversification, the most important of which are improving the efficiency of their service sector, liberalizing imports of services, and encouraging inward direct investment. Reforms of the world trading system, spearheaded by the G20, can help promote these changes at the country level.

This article was originally published on T20 Saudi Arabi 2020 Think website:
https://t20saudiarabia.org.sa/en/briefs/Pages/Policy-Brief.aspx?pb=TF1_PB8 

RELATED CONTENT

  • March 9, 2021
    In the 1990s and 2000s, the world manufacturing production partially moved from advanced countries to some developing countries, especially in Asia. This was the result of the combination of an increase of the labor supply in the global market economy, trade opening, and technological i...
  • March 02, 2021
    The Covid-19 pandemic has severely damaged the global economy. Confinement policies, global value chains disruption and risk aversion in the financial systems markets have brought the glo ...
  • February 24, 2021
    L'intégration régionale en Afrique est considérée comme une priorité par de nombreux responsables politiques et acteurs économiques du continent. Avec la signature de l'accord portant création de la ZLECAf par l'ensemble des pays africains, le défi consiste désormais à mettre en place un marché continental pour les biens et les services et à jeter les bases d'une union douanière continentale. Nombreux sont ceux qui, sur le continent, considèrent la ZLECAf comme un plan d'investissem ...
  • February 5, 2021
    Regional integration in Africa is seen as a priority by many of the continent’s policymakers and economic stakeholders. With all Africa now signed up to the African Continental Free Trade Agreement (AfCFTA), the challenge now is to implement a continental market for goods and services and establish the foundations of a continental customs union. Many on the continent see the AfCFTA as an investment, economic-diversification, and job-creation blueprint that will shape the future of A ...
  • February 1, 2021
    L’entrée en vigueur de l’accord instituant la Zone de libre-échange continentale africaine (ZLECAF) s’inscrit dans la continuité des aspirations anciennes pour intégrer les marchés africains et faire de cette intégration un vecteur de prospérité et de développement. Il s’agit, en effet, d’une étape dont la traversée est inévitable en vue d’aboutir aux aspirations annoncées par l’Agenda 2063. C’est une étape qui concrétise, dans sa première phase, un engagement en faveur de la libre ...
  • January 28, 2021
    The preventive policies implemented worldwide in response to the current pandemic have been devastating to global trade, leading many countries to rethink their national trade policies. T ...
  • January 26, 2021
    أطلقت دول القارة الأفريقية في اليوم الأول من عام 2021 منطقة تجارة حرة قارية، بعد تأجيل دام عدة أشهر بسبب أزمة تفشي فيروس كورونا. وتسعى الدول الأفريقية من خلال هذه المنطقة لإقامة تكتل اقتصادي من ناحية عدد الدول والسكان ليكون أكبر منطقة للتجارة الحرة منذ تأسيس منظمة التجارة العالمية. وفقً...
  • Authors
    Attioui Abdelali
    Billaudot Bernard
    Chafiq Adnane
    December 30, 2020
    Le présent rapport a pour objet d’analyser les implications sur la croissance et le développement du Maroc de son insertion dans l’économie mondiale. Cette analyse est menée en comparant la dynamique économique observée après 1998 à celle qui l’a été avant. En effet, la période 1998-2018 est celle au cours de laquelle se sont manifestés les effets du choix acté et assumé politiquement de l’ouverture (ou du libre-échange, si on préfère). Pour avant, nous nous en tenons à la période 1 ...
  • Authors
    December 30, 2020
    According to this month’s OECD economic outlook, global GDP --- which took a huge hit from the pandemic and is still 3% below its level of a year ago – will not recover its pre-pandemic level until the end of 2021. In a downside scenario, the return could take almost a year longer. The OECD predictions, which imply high and protracted unemployment, are in line with the view of many other official and private organizations. The arrival of effective vaccines such as Pfizer-BioNTech wa ...