Global trade and value chains reduce poverty

In the presentation on the World Development Report 2020 in Bern, the World Bank emphasised the importance of trade in reducing poverty. Global value chains remain a driver for economic growth and for more and better jobs. This finding confirms the relevance of Switzerland’s investments in projects to integrate developing countries in global value chains.

On November 18, 2019, the World Bank presented the World Development Report (WDR) 2020 in Bern. This annual report is the most important thematic publication of the world’s leading development organisation. The report examines the extent to which global value chains can reduce poverty, confirms international trade as a driver for economic development and analyses new challenges.

Global value chains make up 50% of global trade. Aaditya Mattoo, Co-Director of the WDR, explained that these can promote economic growth, create more and better jobs and reduce poverty. New challenges such as tensions between trade partners and the effects of digitalisation and automation can, however, jeopardise these positive outcomes. The World Bank demonstrated that these challenges can be addressed with open markets, trade and investment reforms as well as strengthened social and environmental standards.

SECO Director Marie-Gabrielle Ineichen-Fleisch emphasised the key importance of trade for Switzerland. She illustrated how Switzerland has successfully implemented sustainable and inclusive trade projects to integrate developing countries in global value chains. Overall, Switzerland supports developing countries with technical assistance and know-how within the framework of the “Aid for trade” initiative and the Agenda 2030 with around CHF 60 million per year.

The trade projects of SECO’s Economic Cooperation and Development support the integration of partner countries in international trade. SECO thus invests in projects to promote favourable framework conditions and to strengthen competitiveness and sustainability in global value chains. One example: since 2011, SECO has invested CHF 5 million in a project to develop the organic market in the Ukraine. This project contributed to increasing the export of organic agricultural products by more than CHF 60 million and involved more than 300 agricultural producers. SECO is now considering scaling up this approach in other developing countries.