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20 October 2014 
 
(14-5936) 
WORLD TRADE REPORT 2014 
WTO helps developing countries adju st to major shifts in trading 
environment 
The WTO has played a key role in helping countries adjust to four recent trends that have 
considerably altered the relationship between tr ade and development, according to the latest 
edition of the WTO's flagship publication released on 20 October 2014 in Geneva.  The World Trade Report 2014 argues that the WTO has enabled developing countries to take 
advantage of, adapt to and mitigate risks arising from these trends. It has done so by ensuring 
that countries take binding commitments which increase certainty over their trade policies, by providing flexibilities that better allow developi ng countries to undertake such commitments, and 
by facilitating technical assistance to buil d trading capacity within those economies.  
 
In addition, countries undertaking substantial reforms related to WTO accession were found to grow around 2.5 per cent faster for several years afterwards, the report notes.  The World Trade Report 2014 identifies these four trends as: 
 
- the rise of the developing world; - the expansion of global value chains; - the higher prices of commodities; and 
- the increasingly global nature of macroeconomic shocks. 
 "We have entered a new era in the link between trade and development," Director-General Roberto Azevêdo said in marking the launch of the report. "Driven in large part by trade, some 
developing economies have made remarkable progre ss in recent years, but much still needs to be 
done to close the gap for many poor economies.   "The potential of trade in supporting development has not yet been fully realized," he continued. 
"However, the emerging trends highlighted in this report suggest that trade will be a major force 
for development in the 21st century. The WTO's work is therefore more important than ever. We must continue to deepen our understanding of these issues to ensure that developing countries can reap the benefits of trade more fully in the years to come." PRESS/728 
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The report shows how trade contributed significantly to the unprecedented economic development 
that has taken place since 2000. Trade has allowed many developing countries to benefit from the opportunities created by emerging new markets, to integrate into the world market through global value chains at lower costs, and to reap the rewards from higher world commodity prices.  
 
The WTO has underpinned this progress by providin g certainty, thereby creating the predictable 
environment that allowed economic activity to flourish. In addition, it helped contain protectionism in the face of the greatest economic crisis in 70 years, thus helping to safeguard the economic 
gains made by developing countries in the recent past.  
 Director-General Roberto Azevêdo says in his foreword to the report:   “In December 2013, WTO members took a series of decisions in Bali that, when implemented, will 
help poor countries realize their export potential and sustain the development momentum created 
in the past decade. In addition, trade ministers tasked WTO members to develop a post-Bali work programme on the remaining Doha Developmen t Agenda issues by the end of 2014. In 
highlighting how the relationship between trade and development has changed since the start of 
the millennium, this Report provides food for thought for WTO members. It shows again the 
importance of our work in updating the WTO's rules, disciplines and flexibilities, and it illustrates some of the challenges that we will need to address if we are to ensure that all countries are able to participate fully in the global economy in the years to come, and that people all over the world 
are able to feel the benefits of trade in improvin g their lives and the prospects of their families and 
communities.”   
Main points of the Report 
 
Rise of the developing world 
 
Incomes in developing countries have been converging with those of rich countries. Since 2000, 
GDP per capita of developing countries has grown by 4.7 per cent, with developing country G-20 members performing particularly strongly. Meanwh ile developed countries only grew by 0.9 per 
cent. As a result, developing countries now account for more than half of world output (in 
purchasing power parity terms).   
 Higher GDP per capita helps to achieve other societal objectives, such as reducing poverty and protecting the environment. Given that more trade is associated with faster growth, trade can 
make it easier to achieve these goals.  
 Expanding trade underpinned these gains in income. The share of developing countries in global trade rose from 33 per cent to 48 per cent since 2000. 
 
Over the last couple of decades, developing countries as a whole have reduced MFN tariffs, enabling this trade expansion. Average reductions of MFN tariffs have been greater in G-20 developing countries.  
 
Increasing participation of developing countries in global value chains 
 
Developing countries are increasingly involved in international production networks, including 
through services exports. More than half of their total exports in value-added terms are now PRESS/728 
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 related to global value chains (GVCs). South-South global value chain linkages are becoming more 
important with the share of GVC-based trade betw een developing countries quadrupling over the 
last 25 years.  GVCs offer an opportunity to integrate in the world economy at lower costs. GVC participation can 
lead to productivity enhancements through tech nology and knowledge transfers. Countries with 
high greater GVC participation have experienced higher growth rates.   But gains from GVC participation are not automatic. Many developing countries join GVCs by 
performing low-skill tasks where value capture is low and achieving upgrading to higher value 
tasks can be challenging.   Countries with a favourable business environment and low tariffs participate to a greater extent in GVCs. In addition, GVCs are associated with "d eep integration" agreements: more than 40 per 
cent of free trade agreements in force today include provisions related to competition policy, 
investment, standards and intellectual property rights.  Obstacles for developing countries seeking to participate in GVCs include infrastructure and 
customs barriers.  Directing Aid for Trade resources toward these objectives should therefore 
remain a priority.  
Higher commodity prices  
 
Prices for food, energy, metals and minerals roughly doubled since 2000. Although prices have 
eased back from these historical highs, strong de mand from large developing countries provides a 
strong reason to believe that the high-p rice environment is likely to stay.  
 
The challenges and opportunities arising from high  prices differ significantly across countries. In 
many developing countries the agricultural sector is important in terms of employment, production and consumption.  This suggests an important role for agriculture in development strategies in the developing world. But higher prices pose challenges for net importers of these goods. 
 
Developing countries increased their market share in global agricultural exports from 27 to 36 per 
cent since 2000. But traditional market access barriers such as tariffs and subsidies continue to affect their exports and non-tariff measures are playing an increasingly important role.  
Trade in natural resources has also grown strongly, not only in value terms but also in terms of 
volume. Several resource-rich countries have achieved high growth as a result, but the social and environmental impacts of natural resource extraction as well as economic diversification remain significant challenges. 
 
Increased synchronization in and glob alization of macroeconomic shocks 
 
Global trade value fell by over 30 per cent within only a few months in face of the global economic crisis. This 2008-09 trade collapse and quick subsequent recovery revealed the dependency of 
developing economies on cyclical developments originating in large developed economies. The 
synchronization of downswings and upswings across the world illustrated the strong inter-connectedness of economies through trade and financial links, in particular the role of supply chains in the propagation of shocks, and the import ance of trade finance, which had dried up.    
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  Despite suffering the greatest economic downturn since the 1930s, the world did not see a repeat 
of the wholesale protectionism which marked that previous era. Explanations for this include the 
existence of a set of multilateral trade rules, th e effectiveness of monitoring efforts by the WTO, 
countries' anticipation of the self-harming impacts of protectionism in light of their participation in global value chains, and the internationally coordinated macroeconomic response in light of the 
crisis.  
 
WTO and development 
 The WTO has underpinned the progress made by many  developing countries by allowing them to 
take advantage of, adapt to and mitigate risks arising from the four trends identified in this report.  
It has done so through binding commitments, flexibilities, technical assistance, and its institutional 
infrastructure.   Commitments under the WTO are important for developing countries to promote their trade and 
development. Countries undertaking substantial reforms in the context of WTO accession were 
found to grow 2.5 per cent faster for several years thereafter. At the same time, developing 
countries need flexibilities because their econom ic circumstances can hamper their ability to 
implement obligations. 
 
Development is a fundamental objective of the WTO. The agreement reached in the Bali Ministerial Conference in December 2013 is a positive step in advancing this objective and offers many 
opportunities for developing countries. To make trade work more effectively for development, 
further progress on the Post-Bali Agenda would be important.   
 The four trends show that trade is one of the key enablers of development. Trade has played a 
central role in lifting millions of people out of poverty in recent years and helped to achieve many 
of the UN millennium development goals (MDGs). The WTO and its rules should be seen as an 
integral part of the enabling environment for realizing any post-2015 development agenda.   
END