Post-2015 Consensus: Trade Viewpoint, Ancharaz

Viewpoint Paper

Ancharaz (ICTSD) recognises the importance of trade in achieving the Sustainable Development Goals, but takes issue with Anderson on how it might be expanded. He argues that trade expansion in developing countries should be best addressed by ensuring they can tackle their supply-side constraints, particularly via the Aid for Trade (AfT) initiative.

Although the MDG of halving poverty was achieved 5 years early, the record is uneven across developing regions, with sub-Saharan Africa notably falling far short. A key reason for this failure is that much of the recent export-led economic growth did not create many jobs. The increasing importance of Global Value Chains (GVCs) should make it easier for poor countries to integrate into global markets, but there are relatively few successful examples, partly because of their ostensibly regional character.

Ancharaz finds several flaws in Anderson’s arguments for regional trade liberalization. First, poverty reduction is likely only to occur in the Asia-Pacific region itself, which is not quite the focus of global efforts. Second, any estimates of welfare benefits are purely hypothetical at present. Third, economists have come to realise that it is not market access but supply-side capacity constraints which are the critical barriers to trade. He argues for greater AfT resources to be directed to lower-income economies – since this initiative is designed to build capacity and trade-related infrastructure. Although not all donor countries have fulfilled their funding promises, AfT resources are being directed towards productive capacity building and positive experiences are emerging at a project level.