Countries can implement a menu of policy options to reduce trade costs, including digital technologies, and boost exports, according to a report of the World Bank.
“The fading momentum of global trade growth is diminishing its role as an engine of output and productivity growth. Countries therefore need to find new ways to reap the benefits from trade. One possibility is to cut trade costs to boost exports and encourage imports in a manner that is growth-enhancing,” it said in a report, Falling Long-Term Growth Prospects: Trends, Expectations, and Policies.
The bank said digital technologies may eventually lower trade costs behind the border, at the border, and between borders, including by improving transparency and price discovery as well as information flows between exporters, shippers, and country authorities.
“This may particularly support global supply chains,” it said.
Citing earlier reports, the World Bank said robotics can help accelerate port procedures while artificial intelligence can help lower logistics costs by optimizing route planning, storage, and inventory, as well as by improving tracking and monitoring.
The report said 3D printing can help shorten and localize supply chains, thus reducing the environmental footprint of trade; blockchain technology can help reduce time spent in customs, especially for time-sensitive goods, facilitate cross-border payments by increasing transparency and credibility, and enhance information sharing within supply chains.
Such technologies may disproportionately benefit small and medium-sized enterprises that currently face higher trade costs than large enterprises, it added.
The report said comprehensive packages of reforms have often been successful in reducing trade costs.
Such packages can include trade facilitation measures; bilateral and multilateral agreements aimed at deeper trade integration; and coordinated efforts to streamline trade procedures and processes at and behind the border, it said.
The World Bank also cited improved domestic infrastructure; increased competition in shipping and logistics; reduced corruption; simplified trade-related procedures and regulations; and the harmonization or mutual recognition of standards.
“Many of these reforms, especially those relating to the business climate and governance, would stimulate private, trade-intensive investment and output growth more broadly,” it said.
The report said trade costs accumulate with multiple border crossings through the global value chain.
“Investigating what policy measures can be most effective in reducing trade costs when countries are involved in complex value chains is also key,” it added.