Seizing the Benefits of Trade for Employment and Growth

Open markets play a pivotal role in supporting growth and job creation, and in achieving our goals under the G-20 Framework for Strong, Sustainable and Balanced Growth. We ask the OECD, the ILO, World Bank, and the WTO to report on the benefits of trade liberalisation for employment and growth at the Seoul Summit. The present document is submitted in fulfilment of that mandate. It is the product of close collaboration between the four international organisations, and draws upon the latest research. The message is clear: open markets can contribute to growth and better employment outcomes; this was true before the crisis and it remains true today. In the near term, given pressures on governments, the financial sector, and households to strengthen balance sheets, further trade opening can generate an additional stimulus that will create employment opportunities for the world as a whole. The benefits of trade generally outweigh the costs associated with the reallocation of labour and capital to more efficient uses. However, if support for open markets is to be sustained, those costs need to be recognised and policies put in place to assist workers and communities to adjust to a more competitive environment. It is for this reason that the report considers not only further liberalisation of trade in goods and services, but also highlights the importance of complementary action at the national and international levels to facilitate adjustment and ensure that the benefits of trade are widely shared. Countries that have embraced openness have been more successful in sustaining growth and moving up the development ladder than those that have not. The available evidence highlights that trade openness will contribute to growth and employment, provided that it is complemented by appropriate policies. Trade facilitates technological progress and the global spread of innovation. These deeper economic forces are the primary source of longer-term gains in productivity that are necessary to achieve higher levels of per capita income. National governments have an important role to play in maximizing the contribution that trade can make to ensuring sustainable, balanced, and inclusive growth. Properly designed economic, labour market, education and social policies can serve to enhance the opportunities available to those who stand to gain from trade opening to actually do so and to help those who are displaced to develop new skills and find new opportunities. International institutions can play a supportive role by clarifying how trade, labour market, …