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WTO Report Analyzes Link Between International Trade and Technology

By Karen Lynch

The World Trade Organization (WTO) published in September its 2017 World Trade Report, which focuses on international trade, technology, and jobs amid a rapid transformation of the global economy.1 The WTO publishes its World Trade Report each year, and in past years has focused on trade trends related to such topics as small and midsized enterprises (SMEs), economic development, and natural resources.

This year's report underscores the benefits of international trade and technology to the global economy as a whole, including driving up productivity, driving down the cost of goods, and generally improving living standards around the world. However, "while technological advance and trade-opening continue to yield enormous benefits for economies overall, they can also adversely affect specific groups and regions – a problem which a number of countries are currently struggling to address," the report says. It describes how some national governments are taking steps to maximize the benefits of today's transforming economy and to mitigate adverse effects.

 

The Interrelated History of International Trade and Technology

 

"No two forces are driving the global economic transformation more than technology and trade. Indeed, because economic openness encourages innovation, and vice versa, the two are not just related but mutually reinforcing," the report says. The disruptive impact of international trade and technology today is characterized as a "new chapter in an old story. This process is not new, even if its scale and pace today are unprecedented."

 

The report takes a similar view of history, from the Industrial Revolution 200 years ago through the rise of Asia in the 20th century to the digital economy of today. In the 19th century, the new technologies were steamships, railways, and the telegraph – inventions that enabled Europe and North America to industrialize and become dominant in international trade. In the last century, automobiles, airplanes, and telecommunications became enablers of the next wave of industrializers and international traders, such as South Korea, Singapore, and other Asian countries. In the 21st century, "even more advanced technologies – computers, smartphones, the internet – are fueling the latest and biggest wave of economic catch-up, as dozens of developing countries achieve sustained annual growth rates of 8 percent or more," the report says.

 

The overall impact, worldwide, is this: "Economic development has progressively widened, deepened, and accelerated, thanks in no small part to the interplay of technological innovation and global integration," the report says.

 

Local Response to Global Transformation

 

But there is a catch. "At each stage, continued economic advance has hinged on the ability of countries to adjust – to reconcile the tension between the opportunities presented by economic progress, on the one hand, and the challenge of helping people adapt to economic change and share in its benefits, on the other," according to the report.

 

An example of a related labor shift is that in the 1940s, 350,000 Americans worked as manual telephone operators at a single company, AT&T. By 2012, those jobs were far fewer, but nearly half a million U.S. jobs had been created to make mobile apps. Today's advances in smart technology, artificial intelligence, robotics, and algorithms will have an impact that is difficult to predict. "Some experts argue that history will repeat itself, and the transformative processes brought by the next wave of technological advances will replace many existing jobs but eventually create new jobs and opportunities," the report says. Others see more far-reaching impacts and less job creation.

 

Today, some countries with open trade, advanced technology, and high employment rates also have something else in common – a mix of education, labor, and competition policy designed to meet the challenges of global economic transformation, the report says. Innovative approaches to continuous education are advocated for a more adaptable citizenry, as well as such time-tested standards as on-the-job training. Policies that make a country more competitive are also emphasized in the report.

 

Increasing the competitiveness of a local economy can make it more responsive to opportunities created by international trade and technology, the report says. For example, an emphasis on infrastructure development can deliver returns – not only in terms of production, but in the movement of goods, services, and people within and across national borders. Improving the local credit market can empower domestic companies by lowering the cost of borrowing and/or financing expansion. Negotiating greater access to foreign markets can help local producers sell more abroad. Lowering import barriers can help local companies participate in global supply chains. Streamlining customs procedures and otherwise facilitating trade can also lower costs and barriers in the local economy.

 

Global Deliberations

 

The WTO report follows other recent studies on technology by the World Bank and Organization for Economic Co-operation and Development (OECD). In September 2017, the World Bank published a report titled Trouble in the Making? The Future of Manufacturing-Led Development, which also identifies policy priorities at a time when smart automation, advanced robotics, 3D printing, and other advances are changing how cars, electronics, apparel, and consumer goods are made – and how nations compete for production and international trade.2 The OECD report, The Next Production Revolution: Implications for Governments and Business, added that, "Public understanding and acceptance of new production technologies also matter. … Policy makers and institutions should voice realistic expectations about technologies and duly acknowledge uncertainties."1

 

These and other analyses come as the G-20 group of nations is expected to focus in the coming year on education and labor, in preparing for its annual summit in July 2018 in Argentina.1

 

The

Takeaway:

A series of recent reports looks at the intersection of international trade and technology amid global transformation. The dual forces play a mutually re-enforcing role that has largely benefited the global economy, the reports say, but that requires deliberate national planning and strategy in such areas as education, labor, and competition policy for any country to maximize the benefits of today's transforming economy and to mitigate adverse effects.

Karen Lynch - The Author

The Author

Karen Lynch

Karen Lynch is a journalist who has covered global business, technology and policy in New York, Paris and Washington, DC, for more than 30 years. Karen also is a principal at Content Marketing Partners.

Sources

1. 2017 World Trade Report, World Trade Organization; https://www.wto.org/english/res_e/booksp_e/world_trade_report17_e.pdf
2. Trouble in the Making? The Future of Manufacturing-Led Development, World Bank; https://openknowledge.worldbank.org/bitstream/handle/10986/27946/9781464811746.pdf
3. The Next Production Revolution: Implications for Governments and Business, Organization for Economic Co-operation and Development; http://www.oecd.org/sti/ind/next-production-revolution.htm
4. “Public Forum 2017 – Video,” World Trade Organization;https://www.wto.org/english/forums_e/public_forum17_e/video_e.htm

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