Global Economic Prospects 2002

Global Economic Prospects and the Developing Countries 2002 reviews the global economic environment and its implications for the developing countries over the next decade. Realizing the promise of the new global initiatives to expand trade requires concerted effort to move development to center stage in trade policy formulation. This report is dedicated to that agenda. It begins with a review of global prospects and ways globalization links the fates of industrial and developing countries. The report then considers issues in four broad areas that are particularly important to developing countries: merchandise trade, services, transport, and intellectual property rights. A final chapter summarizes the forward-looking policy agenda, and assesses the potential impact of further global integration and more rapid growth for the standards of living in poor countries everywhere.

Transcript and Powerpoint presentation from the Washington, D.C. launch. Slide shows are also available in English and in Spanish.

As 2001 draws to a close, the global economy is slipping precariously toward recession. Developing countries have seen their economic growth rates plunge.

Growth in trade has undergone one of the most severe decelerations in modern times - from over 13 percent in 2000 to 1 percent in 2001. Developing countries are confronting a 10 percentage point drop in the growth of demand for their exports. Though the weight of evidence still points to a probable recovery in mid-2002, the risks posed to recovery are the gravest in a decade. The terrorist attacks in the United States, although it is still too early to evaluate them fully, have unleashed new and unpredictable forces that have substantially raised the risk of a global downturn.

Against this uncertain backdrop, world leaders have launched an intense discussion about whether to begin a new round of global trade negotiations at the ministerial meeting of the World Trade Organization (WTO) in November 2001. A round would offer an opportunity to renew progress on multilateral rules that open markets and expand trade. A reduction in world barriers to trade could accelerate growth, provide stimulus to new forms of productivity-enhancing specialization, and lead to a more rapid pace of job creation and poverty reduction around the world.

The international community faces a clear choice: whether now is the time to continue down the path toward greater openness that has led to greater integration and prosperity for more than five decades, or whether to allow the hiatus in the wake of the WTO meetings in Seattle (1999) to endure. If trade talks are to succeed in underpinning a new wave of global prosperity, and at the same time contribute to raising the incomes of the poorest in the global community, they will have to ensure that the world’s poorest countries and poorest people will benefit.

This report argues for reshaping the global architecture of world trade to promote development and poverty reduction. The report focuses on four policy domains:

1. Using the WTO ministerial to launch a development round of trade negotiations that would reduce global trade barriers.
2. Engaging in global collective action to promote trade outside the negotiating framework of the WTO.
3. Adopting pro-trade development policies of high-income countries unilaterally.
4. Enacting new trade reform in developing countries.