How can you improve trade performance with better governance?

1 Governance and trade

Governance is the process of making and implementing decisions by public authorities, institutions, and stakeholders. Good governance is characterized by principles such as accountability, transparency, participation, inclusiveness, effectiveness, and rule of law. Good governance can improve trade performance by creating a stable, predictable, and fair framework for trade, reducing transaction costs, enhancing trust and cooperation, and addressing market failures and externalities.

2 Trade policy and institutions

Trade policy is the set of rules and regulations that govern trade relations between countries or regions. Trade policy can affect trade performance by influencing the level and structure of tariffs, quotas, subsidies, standards, and other trade barriers or facilitators. Trade institutions are the organizations and mechanisms that implement, monitor, and enforce trade policy, such as the World Trade Organization (WTO), regional trade agreements (RTAs), customs authorities, and trade dispute settlement bodies. Trade policy and institutions can improve trade performance by promoting market access, reducing trade distortions, ensuring compliance, and resolving conflicts.

3 Trade facilitation and infrastructure

Trade facilitation is the simplification, harmonization, and modernization of procedures and processes related to the movement of goods and services across borders. Trade facilitation can improve trade performance by reducing delays, costs, and uncertainties, improving efficiency and competitiveness, and enhancing trade security and safety. Trade infrastructure is the physical and digital network that supports trade activities, such as roads, ports, railways, airports, telecommunications, and logistics. Trade infrastructure can improve trade performance by improving connectivity, accessibility, reliability, and quality of trade services.

4 Trade diversification and innovation

Trade diversification is the expansion of the range and variety of products, markets, and partners that a country or region trades with. Trade diversification can improve trade performance by reducing dependence on a few products or markets, increasing resilience to shocks, and exploiting comparative advantages. Trade innovation is the introduction of new or improved products, processes, or business models that increase the value and competitiveness of trade activities. Trade innovation can improve trade performance by enhancing productivity, quality, differentiation, and adaptation to changing consumer preferences and global trends.

5 Trade inclusion and sustainability

Trade inclusion is the participation and benefit of all segments of society in trade activities, especially those that are traditionally marginalized or disadvantaged, such as women, youth, small and medium enterprises (SMEs), and informal sector workers. Trade inclusion can improve trade performance by expanding the pool of potential traders, increasing income and welfare, and fostering social cohesion and empowerment. Trade sustainability is the integration of environmental, social, and governance (ESG) considerations into trade activities, such as reducing greenhouse gas emissions, ensuring labor rights, and combating corruption. Trade sustainability can improve trade performance by improving resource efficiency, reducing negative externalities, and enhancing reputation and trust.

6 Challenges and opportunities

Improving trade performance with better governance is not an easy task. It requires political will, institutional capacity, stakeholder engagement, and international cooperation. It also faces several challenges, such as rising protectionism, geopolitical tensions, digital divide, and pandemic shocks. However, it also offers many opportunities, such as leveraging new technologies, tapping into new markets, fostering regional integration, and aligning with global goals. By adopting a holistic and strategic approach to governance and trade, you can unlock the potential of trade as a driver of economic and social development.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?