Protectionism is on the rise in many parts of the world, and the Covid-19 pandemic is only partly to blame. This is hardly a new phenomenon. When I was Indonesia’s trade minister a decade ago, trade liberalisation certainly did not have broad popular support.
Although lowering or eliminating tariffs usually benefits many producers and consumers, it might endanger the livelihoods of some. Understandably, they loudly opposed such measures. A fuller understanding of the uneven distributional effects of trade – put simply, who gains and who loses, where, and why – is critical to designing better supporting policies and to proving governments with the right narrative to allay such concerns.
Aggregate economic data leave no doubt that the rapid increase in global trade over the past 30 years has been a powerful engine of growth and prosperity, dramatically reducing poverty in developing countries. From 1990 to 2017, these countries increased their share in global exports from 16 per cent to 30 per cent, helping to cut the proportion of the world’s population living in extreme poverty from 36 per cent to 9 per cent.
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