Why academic institutions matter in global trade

We conceived the WTO Chairs Programme in 2009, when the global economic crisis was at its worst. And this is no coincidence.

The crisis was indeed a manifestation of global challenges which are testing the capacity of the international system to address them.

The crisis highlighted the crucial role of global cooperation and governance to restore growth and employment.

The adverse impact of the crisis on the world economy in terms of output and employment is undeniable.

This has been the first crisis of a truly global nature; a crisis which has severely affected international trade.

But now trade growth is coming back fast.

The WTO secretariat has forecast global trade growth at 10 per cent, and unless there are unanticipated negative economic impacts in the second half of 2010 this estimate may even turn out to be too low.

While no economy has been spared the adverse effects of economic contraction, it is the more vulnerable developing countries, particularly the least developed, that have been more acutely affected.

The international community has endeavoured to minimise the impact of the crisis in a variety of ways.

We have worked to keep trade flowing by mobilising efforts to ensure that adequate trade finance remains available to exporters.

It is trade finance that lubricates the wheels of trade and it has been in short supply and costly in some parts of the world.

In some economies, stimulus packages have been instrumental in preventing further deterioration in output while paving the way to recovery, even at the cost of inflating public deficits.

Many developing countries have not been able to afford bailout packages for their ailing industries or stimulus packages, or the expansion of social safety nets to those who have lost their jobs.

Hence, most economies in the world, both developed and developing, urgently need other sources of growth — sustainable engines of growth.

This is where trade can be an important part of the story.