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Managing Shocks and Promoting Greater Inclusion

Making the gains from globalization more inclusive and beneficial to poor households while addressing the needs of the unemployed during transition periods is critical to poverty reduction. This is a cross-cutting pillar, in the sense that it connects closely with the other priorities of the Trade Strategy, with the objective of dealing with the impacts of trade-related shocks and to allow greater participation of poor households in the benefits of trade. Informal trade, in particular, often plays an important role in many developing countries, particularly in linking producers of food staples to regional markets. The magnitude of such trade is highly sensitive to the conditions faced by traders. Supporting informal traders in growing their businesses through lowering trade costs, including improving conditions they face at borders, and allowing them to grow to more formal modes of exchange is crucial if the potential for cross-border trade is to benefit the poor. The adjustment processes associated with trade openness contribute to skill and gender differentiated inequalities in labor market opportunities and outcomes. Similarly, the benefits from trade are often concentrated in the largest metropolitan areas, further exacerbating inter-regional inequalities.

Promoting internal trade, as well as exports, therefore also matters through helping to connect lagging and more remote regions to high growth areas within countries as well as between them. The main priorities in this area include:

  • assisting the most vulnerable to manage trade shocks;
  • making trade a more prominent part of the solution to global food price volatility, as opposed to part of the problem;
  • doing more to address the gender dimension in trade support activities; and
  • extending the benefits of trade to lagging regions within countries by ensuring poor people in these areas can better connect to those places where agglomeration occurs.

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