A new World Bank report finds that improvements in border administration and transport & telecommunications infrastructure and services could result in an up to 4.7% increase in global Gross Domestic Product (GDP).
According to the new report released by the World Economic Forum in collaboration with Bain & Company and the World Bank, which was made available to the Ghana News Agency on Thursday, if all countries reduce supply chain barriers halfway to global best practice, global GDP could increase by 4.7% and world trade by 14.5%, far outweighing the benefits from the elimination of all import tariffs.
It said in comparison, completely eliminating tariffs could increase global GDP by 0.7% and world trade by 10.1%; even a less ambitious set of reforms that moves countries halfway to regional best practice could increase global GDP by 2.6% and world trade by 9.4%.
It stressed that economic gains from reducing supply chain barriers are also more evenly distributed across countries than the gains associated with tariff elimination.
It said regions that stand to benefit in particular under these scenarios are sub-Saharan Africa and South East Asia.
And such large increases in GDP would be associated with positive effects on unemployment, potentially adding millions of jobs to the global workforce.
According to the report, lowering supply chain barriers is effective because it eliminates resource waste and reduces costs to trading firms and, by extension, lowers prices to consumers and businesses.
Supply chain barriers can result from inefficient customs and administrative procedures, complex regulation and weaknesses in infrastructure services, among many others.
The supply chain is the network of activities involved in producing and getting a product to consumers, and spans the manufacturing process as well as transport and distribution services.
The report provides a wealth of information regarding how policies can create unnecessary supply chain costs and inefficiencies based on 18 case examples spanning multiple industries and regions.
The report recommends that governments create a focal point to coordinate and oversee all regulation that directly impacts supply chains; that public-private partnerships be established to undertake regular data collection, monitoring and analysis of factors affecting supply chain performance; and that governments pursue a more holistic, supply-chain-centred approach towards international trade negotiations to ensure that trade agreements have greater relevance for international business and do more to benefit consumers and households.
The report urges governments should take a holistic approach that considers the entire supply chain, focusing on all policies that impact supply chain efficiency to improve national competitiveness.
It held that Small and Medium Enterprise sector would witness increased trade with solutions to specific constraints that disproportionately affect smaller companies.