The Future of Trade

• Author: Pinelopi Koujianou Goldberg
• Position: Chief economist of the World Bank Group
• Pages: 20-23

20 FINANCE & DEVELOPMENT | June 2019

Policy can play a role in shaping the future of the ailing multilateral trade system

Pinelopi Koujianou Goldberg

THE FUTURE OF

TRADE

T

he 75th anniversary of the Bret ton Woods

multilateral institutions ironically comes

at a time when the benets of multilater-

alism are being ch allenged. Doubts about

the functioning of our cu rrent trading system are

particularly pronounced. What is the future of

trade in this cha llenging environment? Does the

recent rise of protectionism signif y the end of the

open, rules-based trading system that fostered

globalization? Or ca n we rescue the system through

judicious reform?

e postwar globa l economy saw unprecedented

growth of global tra de and income. Explanations for

this growth abou nd: a sharp decline in information

and communication costs, technological change

allowing for increasing fragmentation of produc-

tion, political developments such as the integration

of eastern Europe and east Asia into world mar-

kets, and international cooperation. e nature

of the beast is such that qua ntifying t he relative

contribution of each of these explanations to the

growth of trade dees clean identication and

robust econometric evidence. Yet based on rst

principles, strongly suggestive empiric al evidence,

and anecdotal acc ounts, there is little doubt that a

rules-based, predic table trading system contributed

signicantly to tr ade and trade-induced growth in

many parts of the world, especia lly in Europe and

ART: ISTOCK / MARIGOLD_88