Reduction in supply chain barriers can bolster growth: WEF
From Barun Jha
Davos, Jan 23 (PTI) Bringing down supply chain barriers can bolster the global economy and push the output by as much as 4.7 per cent, according to a report released today.
Such reductions can give a greater boost to global economy and trade, according to the report prepared by the World Economic Forum (WEF) in collaboration with Bain & Company and the World Bank.
"If all countries reduce supply chain barriers halfway to global best practice, global GDP could increase by 4.7 per cent and world trade by 14.5 per cent, far outweighing the benefits from the elimination of all import tariffs," the report titled ''Enabling Trade: Valuing Growth Opportunities'' said.
In comparison, completely eliminating tariffs could increase global GDP by 0.7 per cent and world trade by 10.1 per cent.
"Even a less ambitious set of reforms that moves countries halfway to regional best practice could increase global GDP by 2.6 per cent and world trade by 9.4 per cent," it said.
Further, the report said economic gains from reducing supply chain barriers are more evenly distributed across countries than the gains associated with tariff elimination.
According to the report, governments can create a focal point to coordinate and oversee all regulation that directly impacts supply chains, among others.
"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," Director of the World Bank''s International Trade Department Bernard Hoekman said.
He is also the chair of WEF''s Global Agenda Council on Logistics & Supply Chains.