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Diversification and the world trading system

Diversification is important because it is associated with economic growth and reduced volatility.

By: , , , , , , and Date: September 16, 2020 Topic: Global Economics & Governance

This publication was originally published on T20 Saudi Arabia.

Diversification of exports, which provide foreign exchange and enable imports of critical goods, services, and know-how, is crucial for developing countries. The question we address in this brief is how export diversification is affected by trade policies, including multilateral rules, regional trade agreements, and national measures.

The record on diversification is poor across a large number of developing countries, especially in Africa, the Middle East, and Latin America. Asian and Eastern European countries have performed better. Though diversification first requires domestic reforms, the current trading system does not help.

The world trading system does not support developing countries with export diversification; moreover, the situation is deteriorating. To promote export diversification in developing countries and to sustain long-term global growth, the Group of Twenty (G20) must restore the credibility of the rule-based system. Reducing tariffs and tariff escalation in labor-intensive manufactures is critical.

In many developing countries, the diversification potential for agriculture is severely impeded by subsidies, tariff barriers, and protectionist standards. Individual countries can take many steps to foster export diversification, the most important of which are improving the efficiency of their service sector, liberalizing imports of services, and encouraging inward direct investment. Reforms of the world trading system, spearheaded by the G20, can help promote these changes at the country level.

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Opinion

A K-shaped recovery and the role of fiscal policy

The spine of the letter represents the fall in activity at the start of the pandemic. Then there is a split, which leads to the two ‘arms’ that capture the different directions taken by economic activity in different sectors.

By: Maria Demertzis Topic: European Macroeconomics & Governance Date: March 2, 2021
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Think green act local: the role of the G20 in sustainable infrastructure

In this workshop, invited guests will discuss priorities and proposals for the Italian G20 Presidency for a green local infrastructure agenda.

Speakers: Amar Bhattacharya, Maria Demertzis, Niclas Poitiers and Gelsomina Vigliotti Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels
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Blog Post

How is the G20 tackling debt problems of the poorest countries?

The G20 Debt Service Suspension Initiative, although a partial success, has been dogged by competing interests and lack of coordination. A further push is needed to solve the coordination problem.

By: Suman Bery, Alicia García-Herrero and Pauline Weil Topic: Global Economics & Governance Date: February 25, 2021
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Opinion

Will COVID accelerate productivity growth?

The COVID-19 pandemic has prompted an increasing number of rich-country firms to reduce their reliance on global supply chains and invest more in robots at home. But it is probably too soon to tell whether this switch will increase productivity growth in advanced economies.

By: Dalia Marin Topic: European Macroeconomics & Governance, Global Economics & Governance Date: February 10, 2021
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Past Event

Past Event

Carbon Border Adjustment Mechanism: Greening the EU trade?

Assessing CBAM from a trade perspective.

Speakers: Suman Bery, Luis Garicano, Emily Lydgate and André Sapir Topic: Energy & Climate, Global Economics & Governance Date: February 4, 2021
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External Publication

China and the WTO: Why Multilateralism Still Matters

An examination of China’s participation in the World Trade Organization, the conflicts it has caused, and how WTO reforms could ease them.

By: Petros C. Mavroidis and André Sapir Topic: Global Economics & Governance Date: January 28, 2021
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External Publication

Getting America Back In The Game: A Multilateral Perspective

How can friends of the multilateral system re-engage the United States under President-elect Biden?

By: Richard E. Baldwin, Chad P. Bown, Jonathan T. Fried, Anabel González, André Sapir and Tetsuya Watanabe Topic: Global Economics & Governance Date: January 28, 2021
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Podcast

Podcast

A rushed deal or a rush to judgement?

The Comprehensive Agreement on Investment (CAI) is supposed to improve market access for European companies operating in China and to ensure a level playing field, as well as reciprocity. Does it fulfil such expectations?

By: The Sound of Economics Topic: Global Economics & Governance Date: January 27, 2021
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Opinion

疫情對全球經濟的結構性改變或比想像的更深

現在是時候重新思考我們目前經濟模式中的基本原理,來減輕這些影響。

By: Alicia García-Herrero Topic: Global Economics & Governance Date: January 21, 2021
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Opinion

RCEP對亞洲影響積極,無阻價值鏈重組

總體而言,雖然RCEP成員之間在市場准入上實際提升幅度有限(例如中國和澳洲),但這一協定的意義在於讓世界意識到,亞洲仍然依賴中國市場,亞洲國家不能錯過中國放寬市場准入的機會,即使幅度有限。

By: Alicia García-Herrero Topic: Global Economics & Governance Date: January 21, 2021
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Opinion

An EU - China investment deal: a second look

For the moment, it does not look like we have the basis for greater and deeper economic relations with China. However, dismissing China and the opportunities that it creates for global cooperation would also be a mistake.

By: Maria Demertzis Topic: Global Economics & Governance Date: January 19, 2021
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Opinion

Résilience : la nouvelle boussole

Pour surmonter le choc de la pandémie de Covid-19, l’économiste écarte, dans sa chronique, l’idée d’un repli protectionniste, mais suggère de passer d’un objectif de réduction des coûts à celui de la réduction des risques.

By: Jean Pisani-Ferry Topic: Global Economics & Governance Date: January 18, 2021
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