Trade and structural adjustment

This identifies both for developed and developing countries, the requirements for successful trade-related structural adjustment via the reallocation of labour and capital to more efficient uses, while limiting adjustment costs for individuals, communities and society as a whole. It is based on a longer study which incorporates detailed sectoral case studies.

A number of elements of a policy framework are found to be applicable across different countries. They are:

• macroeconomic policies that promote stability and growth.
• labour market policies that help develop workers’ skills and facilitate labour mobility across occupations, firms, industries and regions while providing adequate assistance to those who experience adjustment costs as a result of structural change
• an efficient framework of regulation that achieves regulatory objectives while keeping regulatory burdens on enterprises to the necessary minimum, fosters competition and helps ensure genuine market openness
• an institutional and governance framework that will favour structural reform, while enhancing social dialogue and public understanding and acceptance of reform measures
• liberal trade and investment policies that support structural adjustment by contributing to growth, innovation and competitiveness and are implemented gradually enough to enable affected parties to adapt and quickly enough to avoid policy reversal.

For the poorest countries in particular, this means building sound institutions, fostering an appropriate macroeconomic framework and removing any anti-export bias, improving firms’ access to finance and infrastructure, enforcing core workers’ rights and developing human capital and reducing their own, often high, barriers to trade.