How Innovation is Revolutionizing Global Trade

WASHINGTON, DC, January 30, 2023 – Global trade, in many ways, makes the world go round. Think of any electronic good, clothing item, or perhaps a chocolate bar; all everyday items which are in consumers hands and homes because of global trade, providing countless jobs. 

Mona Haddad, the Global Director for Trade, Investment and Competitiveness at the World Bank Group, explains: "Trade is an engine of growth that creates better jobs reduces poverty and increases economic opportunity.” 

Mona adds that trade liberalization increases GDP, and that it has, “lifted more than one billion out of poverty since 1990."

But for these benefits to be shared more equally, trade needs to be efficient, and this is not always the case.

The complexity and interconnected nature of global trade was laid bare during supply chain disruptions due to the COVID-19 pandemic. Shipping delays, and shortages, meant unprecedented issues for many exporters, importers, businesses and consumers. 

But for Miishe Addy, the co-founder and CEO of Jetstream Africa, headquartered near the Ghanaian port of Tema, COVID-19 also led to an opportunity for rethinking the system itself. 

“It’s one of the largest container ports in West Africa. Despite technology that could have been applied, when we started the business, there was almost no technology. It was mostly cash and mostly manual.” 

Miishe saw the moment to create her business. 

“Covid accelerated digitization in Africa. It was difficult to move around, including at the port, the old fashioned manual methods of clearing and moving cargo were really inefficient.” So Jetstream created a technology platform which effectively takes on a supply chain for a customer’s cross border trade. 

Miishe says this is important because slower trade means more expensive goods for consumers. 

“Even though incomes are generally lower here and profits are lower, supply chains are the slowest in the world. Every day African families are effectively paying a tax on the goods they consume.”

Alina Antoci is a Senior Trade Facilitation Specialist at the World Bank Group.

She has worked with dozens of countries looking to introduce digital systems for trade, such as Electronic Single Windows, and Trade Information Portals. 

“Technology and digitization makes trade faster, cheaper, easier and more predictable” she says, adding that “automation makes things more efficient at borders and ports.” 

Alina also says that taking the human out of some of these processes also reduces corruption, and makes access to information equitable and reliable. 

Advancements in technology are not the only ways trade is being revolutionized. Global Trade has a huge carbon footprint, and this is something that the world’s largest container shipping firm, Maersk, is planning to not shy away from addressing. 

“Moving goods around the world emits between 3-4 billion tons of co2 a year. “

Morten Bo Christiansen, Head of Decarbonization at A.P. Moller - Maersk explains that the industry needs to rethink the way goods are transported. 

“We have a commitment to become net zero by 2040.”

One of the big issues is of course, the burning of fossil fuels to power ships which traverse the world’s oceans making trade possible. But this, says Morten, needs to be entirely rethought. He says it’s currently a kind of “chicken and egg” issue for the industry.

“There are green fuels available, but you have the situation where there are no green ships. So nobody’s building the green ships because there are no green fuels but there are no green fuels because there are green ships.”

His company have developed a new fuel, based on methanol, which they see as the future. But of course, this will also depend on global infrastructure for refueling and supply. 

Climate and trade, says the World Bank Group’s Vicky Chemutai, are interconnected in many ways, particularly for developing countries. 

“In an increasingly climate change affected world, trade will gain even more importance,” she says. 

“Food insecurity is very high and the effects of climate change are very high in these countries… so the sustainable trade of food will be crucial to maintaining food security." 

She adds that other issues such as increasing heat can have impacts on trade. “Heat impacts worker productivity… and that impacts export sectors - in countries like Bangladesh.”

Vicky says that improving the way trade is done is key.

“Addressing trade facilitation concerns at border points could in turn reduce food waste for example.” 

She says there are a raft of ways that trade facilitation can improve the relationship between trade and climate.

“The trade policy solutions exist, and most of them are a quick win…. All of the solutions need to be done at scale, but they exist, they really do.”

The world of trade is not a simple one, and there are pressing issues to address, but innovation in so many areas is proving revolutionary for so many. 

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Support for the initiative was provided by the World Bank Group with funding from the Trade Facilitation Support Program (TFSP). The TFSP is funded by nine donor partners: Australia, Canada, the European Commission, the Netherlands, Norway, Sweden, Switzerland, the United States, and the United Kingdom. The program provides assistance to countries seeking to align their trade practices with the World Trade Organization Trade Facilitation Agreement (WTO TFA).

To learn more, listen to Trade Tips – the World Bank Group’s new podcast that tackles the big issues in the world of trade and explores solutions.