Reducing supply chain barriers could increase global GDP and world trade much more than reducing all import tariffs, according to a report released today by the World Economic Forum in collaboration with Bain & Co. and the World Bank.
“Enabling Trade: Valuing Growth Opportunities,” found that if all countries reduce supply chain barriers halfway to global best practice, global GDP could increase by 4.7 percent and world trade by 14.5 percent. In comparison, eliminating tariffs could increase GDP by 0.7 percent and world trade by 10.1 percent.
According to the report, lowering the barriers is effective because it eliminates resource waste and reduces costs to trading firms, and, by extension, lowers prices for consumers and businesses.
The study also outlines how policies can create unnecessary supply chain costs and inefficiencies and provides recommendations for governments.