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Poverty Reduction Rests on Trade

After a year of escalating trade conflicts, the world must not forget that open trade has been a key engine of economic growth and poverty reduction in recent decades. With the global economy now entering a broad slowdown, measures to expand economic opportunity through trade have become all the more important.

WASHINGTON, DC – Just when poverty-reduction efforts around the world were already slowing, recent forecasts indicate that the global economy is heading into a period of deepening uncertainty. That makes measures to boost growth and expand economic opportunity all the more urgent – which is why revitalizing trade must be high on the global policy agenda. The evidence is clear: as an engine of economic growth and a critical tool for combating poverty, trade works.

With today’s trade tensions, it is easy to lose sight of the progress the world has made over the past few decades of economic integration. Since 1990, more than one billion people have lifted themselves out of poverty, owing to growth that was underpinned by trade. And today, countries are trading more and deepening economic ties even faster than in past decades. There are currently more than 280 trade agreements in place around the world, compared to just 50 in 1990. Back then, trade as a share of global GDP was around 38%; in 2017, it had reached 71%.

Open trade is particularly beneficial to the poor, because it reduces the cost of what they buy and raises the price of what they sell. As new research from the World Bank and the World Trade Organization makes clear, farmers and manufacturing workers earn more income when their products can reach overseas markets.

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