Study Finds That Cutting Supply Chain Barriers Better Remedy for Global Growth than Ending Import Tariffs
Adopting best practices would expand GDP at much faster rate than tariff cuts
Reducing global supply chain barriers through the adoption of best practices could increase annual world GDP by 4.7%, expand world trade by 14.5%, and be far more effective in promoting growth than removing all import tariffs, according to a study released yesterday at the World Economic Forum (WEF) in Davos, Switzerland.
The study, conducted by consultancy Bain & Co. and the World Bank, found that even taking “half-measures” toward implementing best practices would be six times more beneficial to global growth than eliminating all tariffs. By contrast, the removal of all tariff barriers would stimulate global GDP by only 0.7% and world trade by 10.1%, according to the report.
The study affirms the broad consensus that supply chain best practices, while well established in North America and western Europe, are very much alien concepts in other parts of the world, notably in fast-growing emerging markets.
The report, called “Enabling Trade: Valuing Growth Opportunities,” identified 18 examples of poor supply chain practices, and defined, in broad terms, how cost overruns, product delays and administrative inefficiencies could be reduced by implementing Best Practices. The 18 case studies cut across multiple regions, countries and industries. Read more here.
Date: January 30, 2013