In the wake of mounting geopolitical tensions and health crises, the world is witnessing a significant slowdown in trade reform, leading to what economists term as “slowbalization.” The latest findings from the Hinrich-IMD Sustainable Trade Index 2023 shed light on the changing dynamics of global trade, highlighting the delicate balance between open trade and sustainable practices.
New Zealand and the United Kingdom have once again emerged as frontrunners, showcasing a harmonious coexistence between trade and sustainability objectives. These nations have effectively managed the balance for the second consecutive year, setting an example for others to follow. Singapore has also made remarkable progress, climbing from the 5th to the 3rd position in the STI 2023 rankings.
“Economies that balance trade and sustainability well tend to be the more developed ones, in which the cost of making trade more aligned to the Sustainable Development Goals is lower,” said Professor Arturo Bris, Director of IMD’s World Competitiveness Center, which produces the STI in partnership with the Hinrich Foundation.
“With global trade challenged by geopolitical and health issues, the work of streamlining supply chains and reducing costs has become paramount, even at the expense of social or environmental considerations in global trade. Our index sheds light on how this trade-off is being played out,” said Bris.
“The global trade system is experiencing fragmentation that threatens to erode the achievements of 70 years of globalization,” said Kathryn Dioth, CEO of the Hinrich Foundation. “Protectionist trade policies are being implemented under the guise of responding to the headwinds of post-pandemic inflation and geopolitical tensions. And while global trade continues to expand in value, that is mainly due to higher commodity prices.”
Contrary to expectations, major economies are raising tariffs and non-tariff barriers, slowing down trade liberalization, and posing challenges to effective economic management. This trend raises concerns about how states can navigate economic, societal, and environmental sustainability in the face of these obstacles.
Economies that strike the right balance tend to be more developed, boasting robust infrastructure, technological innovation, political stability, economic equality, high educational attainment, and stringent environmental standards. The report emphasizes the critical role of these factors in achieving sustainable trade practices.
The report’s findings underscore a growing fragmentation in the global trade system, jeopardizing the accomplishments of seven decades of globalization. Protectionist trade policies are being implemented under the guise of addressing post-pandemic challenges, leading to a complex landscape where trade expansion is primarily driven by higher commodity prices.
Pillars of Analysis:
The STI 2023 assesses economies based on three pillars: economic growth, societal development, and environmental protection. These pillars encompass a wide array of indicators, reflecting long-term goals related to economic prosperity, social equity, and environmental sustainability.
As the world grapples with the challenges of slowbalization, the STI 2023 serves as a crucial reminder of the delicate balance needed between global trade and sustainable practices. Nations such as New Zealand, the United Kingdom, and Singapore stand as beacons of successful navigation in these turbulent times. The report’s insights call for renewed global cooperation and strategic policies to preserve the core principles of open trade while ensuring a sustainable future for all.
