Making Trade Policy Inclusive

Abstract

With the rise of global value chains where different stages of the production process are located across different countries, international trade flows became increasingly intricate, resulting in innumerable flows of goods, services and people across multiple borders. The reduction of trade barriers has presented new opportunities as well as accompanying risks for businesses, governments and consumers. However, there is still divergence between economists’ attachment to free trade and what we observe in actual policymaking. Consequently, levels of trade protection (including tariffs, subsidies, quotas, regulations and currency manipulation) remain common, with a corresponding need to better understand how political processes and institutions affect trade policy choices – and which choices support better development outcomes such as livelihood opportunities or food security. That is why the research of the Business, Markets and the State (BMAS) cluster at IDS has placed political economy analysis at the centre of understanding the distribution of trade gains and losses. Understanding and addressing asymmetries along power dimensions, and how winners and losers are affected by trade policy changes, remain key for progress towards the Sustainable Development Goals (SDGs).