Increase Global GDP and Trade by Reducing Supply Chain Barriers

Reducing supply chain barriers could increase global GDP and world trade much more than reducing all import tariffs, according to a study by World Economic Forum. The study shows that if all countries reduce supply chain barriers halfway to global best practice, world trade could increase by 14.5% and world trade by 4.7%. Similarly, if eliminating import tariffs could increase world trade by 10.1% and global GDP by 0.7%. The gain associated with reducing supply chain barriers are more evenly distributed across countries than the gains associated with eliminating tariffs. Such drastic increase in GDP would significantly help in reducing unemployment.

Supply chain barriers can result from inefficient customs and administrative procedures, complex regulation and weaknesses in infrastructure services, among many others. Officially, World Economic Forum categorizes the barriers into four groups:

• Market access: The degree to which a country’s policy framework facilitates import and export of goods
• Border administration: The degree to which border administration facilitates the entry and exit of goods
• Transport and communication infrastructure: The degree to which a country has the neseccary transportation and communication infrastructure to facilitate movement of goods within the country or across the border
• Business environment: The regulatory and security environment affecting the trade activity within the country

With increasing security concerns due to violent activities across the world, is it safe to reduce the supply chain barriers discussed above? Specially when people are thinking of unique violent techniques to harm people globally.

http://www.weforum.org/news/report-reducing-supply-chain-barriers-could-increase-global-gdp-six-times-more-removing-all-imp