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How Trade Can Affect Competitiveness

By Federico Mazzella ,
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A recent World Economic Forum document has found a virtuous relationship between trade liberalization and economic competitiveness.

Trade, investment, and the free movement of persons are fundamental for development. So argues The Case for Trade and Competitiveness (October 2015), a report published by the World Economic Forum, which also details how trade could improve competitiveness and stimulate growth, productivity, and job creation.

The text indicates that trade openness is essential for any country seeking to improve its competitiveness, while also increasing local firms’ chances of success and raising the country’s chances of participating in Global Value Chains (GVCs).

The document also points out that the trade agreements signed between different nations offer incentives for the private sector to improve productivity and invest in innovation.

The study concludes that once this process is underway, the relationship between trade and competitiveness slips into a “virtuous cycle,” in which the two trends continually reinforce one another.

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