(Ecofin Agency) - Per capita income has grown threefold over the past three decades in low- and middle-income economies, according to the World Trade Organization. As the organization celebrates its 30th anniversary, it urges greater investment to promote more inclusive trade amidst geopolitical challenges and the threat of economic fragmentation.

International trade, facilitated by the World Trade Organization (WTO),  has played a key role in driving economic growth and reducing global poverty over the past three decades, the World Trade Report 2024 shows. The report, WTO’s flagship publication, highlights the role of trade in facilitating market access and boosting investments, leading to significant improvements in the lives of millions of populations.  

The report revealed that between 1995 and 2022, the poverty rate in low- and middle-income economies plummeted from 40.3% to 10.6%, while trade's share of their GDP doubled from 16% to 32%. This shift created new opportunities, although the relationship between trade and poverty, as well as inequality, remains complex.

“Contrary to common belief, income inequality within economies has not increased on average over the past 30 years. The average Gini index — a common measure of inequality — across a broad range of economies has even declined slightly during this period,” said WTO Chief Economist Ralph Ossa at the report's launch in Geneva. He added that trade openness has a weak correlation with inequality, which tends to be slightly lower in more open economies.

Despite the achievements, several economies and many populations are still left behind, the  WTO acknowledges. The organization urges for greater inclusion of these groups in global trade.

This report comes at a time when global trade faces mounting tensions, particularly with rising protectionism in major economies. The recent tariffs imposed by the United States and the European Union on Chinese electric vehicles, accused of dumping, are clear examples of these strains. The WTO warns that such protectionist policies, designed to safeguard certain sectors, can backfire by raising costs for other industries and diminishing the overall benefits of trade. They can also lead to retaliatory trade measures, further limiting economic opportunities.

In 2023, global trade contracted by 3%, a drop of about $1 trillion, according to the United Nations Conference on Trade and Development (UNCTAD), following a record high of $32 trillion in 2022. This decline is attributed to geopolitical tensions and supply chain disruptions.

In response to these challenges, the WTO is calling for more inclusive trade, through initiatives in partnership with institutions like the World Bank to support national and regional efforts. “The mission of the World Trade Organization, as set out in the preamble to its founding Marrakesh Agreement, is to use trade as a means to raise living standards, create jobs, and promote sustainable development,” WTO Director-General Ngozi Okonjo-Iweala reminded.

Moutiou Adjibi Nourou, Special Correspondent