WTO: "Trade Tripled Per Capita Income in Low-Income Countries Over 30 Years"... Warning Against Protectionism

WTO Report
65% Increase in Global Per Capita Income Since Inception
Threefold Growth in Middle and Low-Income Countries During Same Period
Concerns Over Widening Wealth Gap Among Protectionist Countries

The World Trade Organization (WTO) has issued a warning that the poorest countries will be hit hardest by the spread of global protectionism, such as tariff increases. In particular, concerns have been raised that the gap between these economies could widen further as free trade, which has helped reduce the wealth gap between developed and poor countries over the past 30 years, is now under threat.

[Image source=Reuters Yonhap News]

On the 9th (local time), ahead of its annual forum, the WTO released a report asserting that free trade has played a significant role in alleviating poverty and income inequality.

According to the report, from the WTO’s inception in 1995 until 2023, per capita income adjusted for inflation increased by about 65% globally. Meanwhile, per capita income in low-income and middle-income countries nearly tripled. The proportion of people classified as extremely poor fell from 40.3% to 10.6% during the same period. The share of low-income and middle-income countries in global trade surged from 21% to 38%, nearly doubling.

WTO Director-General Ngozi Okonjo-Iweala stated, "The findings of this study refute the widely held notion that trade and institutions like the WTO do not benefit poor countries."

The WTO expressed concern that low-income countries rely on foreign investment and the trade generated by such investment to access advanced technologies, and that these countries would be directly hit if trade barriers rise.

The report explained, "Low-income economies are the furthest from technology and depend on foreign markets for sustained growth," adding, "If the global economy continues to fragment amid geopolitical pressures, low-income economies will suffer disproportionately severe damage."

This report comes amid a global rise in protectionist trends. Self-styled "Tariff Man" and former U.S. President Donald Trump, a Republican presidential candidate, has announced plans to impose a universal 10% tariff on all global imports and a super-high 60% tariff on Chinese imports if he returns to the White House, signaling a strengthening of trade barriers. The WTO predicts that such tariff increases will trigger retaliatory tariffs from other countries and impose a heavy burden on developed economies as well.

The report forecasted, "Restricting trade is a typically costly way to protect jobs in specific social groups," adding, "It raises production costs and can provoke expensive retaliation from disgruntled trading partners."

Some argue that global trade actually widens the wealth gap. In this context, Director-General Ngozi stated that trade cannot completely eliminate income disparities.

Director-General Ngozi emphasized, "Countries need to take measures to ensure that as many citizens as possible benefit from opportunities created in open, rules-based international markets," adding, "Bringing more economies and communities from the periphery into the mainstream of the global economy and helping attract investment that can promote more trade is a promising path toward a global economy that benefits everyone."