Can Lowering Supply Chain Barriers Provide a Bigger Payoff Than Removing Tariffs?

A recent report “Enabling Trade: Valuing Growth Opportunities” provided by The World Economic Forum demonstrates that reducing supply chain barriers could increase global gross domestic product (GDP) and world trade by much more than reducing all import tariffs. Also, reducing supply chain barriers would offer more economic gains that are evenly distributed vs. economic gains linked with tariff elimination.

The report demonstrates that if every country improved just two key supply chain barriers – border administration and transport and communications infrastructure and related services – even halfway to the world’s best practices, global GDP could increase by US$ 2.6 trillion (4.7%) and exports by US$ 1.6 trillion (14.5%).

Also featured in the report are 18 case studies, which companies were asked about the biggest supply chain barriers they face and which regions and products are most problematic. The report organizes supply chain barriers to trade into four main categories and the nine specific pillars they embrace.

Based on the findings, it was suggested that particular policies impact supply chain performance and that there is a need for specific tipping points to be achieved for reductions in supply chain barriers to have a significant impact on trade. The report also demonstrated that small and medium-sized enterprises tend to face proportionally higher supply chain barriers and costs.

To access the full report, click here. For a broad overview and summary of the report, review this post in the Sandler, Travis & Rosenberg Trade Report.

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