Trade, Investment and Development: Reaping the Full Benefits of Open Markets

Developing and transition economies are seeking to accelerate their development by liberalising trade and investment, and taking advantage of the opportunities of the global market place. However, in the wake of recent financial crises, concerns have been expressed that some countries might turn away from open trade and investment. In fact, most crisis-affected countries are continuing to liberalise trade and investment, which they see as part of the solution to the crisis, not the cause. This report reviews evidence of the benefits and challenges of trade and investment for development, drawing on experiences from economies in various parts of the world. Experience shows that open trade and investment have been beneficial for development, when accompanied by a coherent set of growth-oriented macroeconomic and structural policies, capacity-building, social policy and good governance. Further, countries like Korea and Mexico that have responded to economic crisis with liberalisation and structural reform have experienced positive results. All countries -- developed, developing and transition -- have a vital stake in a new Round of multilateral trade negotiations to prepare for the global economy of 21st century.