The report entitled Enabling Trade: Valuing Growth Opportunities was released by the World Economic Forum in Davos (pictured) in collaboration with the World Bank and Bain & Company and found that if all countries reduce supply chain barriers halfway to global best practice, global GDP could increase by 4.7% and world trade by 14.5%.
This would far outweigh the benefits of eliminating just import tariffs, which could increase global GDP by 0.7% and world trade by 10.1%.
The economic gains of eliminating such barriers would also be more evenly distributed across regions boosting GDP in sub-Saharan Africa and South East Asia, potentially creating millions of jobs.
The report suggests that the reason why eliminating these barriers would be more effective is that it eliminates resource waste and reduces costs to trading firms and, by extension, lowers prices to consumers and businesses.
It also recommends that governments create a focal point to co-ordinate and oversee all regulation that directly impacts supply chains; that public-private partnerships be established to undertake regular data collection, monitoring and analysis of factors affecting supply chain performance; and that governments pursue a more holistic, supply-chain-centred approach towards international trade negotiations.
Commenting on the findings Bernard Hoekman, director of the World Bank’s International Trade Department and Chair of the Forum’s Global Agenda Council on Logistics & Supply Chains, said: “Supply chain barriers are more significant impediments to trade than import tariffs.
“Lowering these barriers will reduce costs for businesses, and help generate more jobs and economic opportunities for people.”
