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Over the past 15 years accelerated economic growth in developing countries has resulted in narrowing of the income gap between developing and developed countries. The growth spurt in developing countries has been dramatic: After growing a mere 1.5% annually in the 1990s, incomes have grown by 4.7% per year on average thereafter. Meanwhile annual per capita income growth in the developed world slowed to just 0.9 per cent, down from 2.8% in the 1990s. Developing country G-20 members have done particularly well (5.2%), while both LDCs and other developing countries have grown 3.7%. Given their size, rapid industrialization and greater trade openness among developing country G-20 members such as China, India and Brazil may have drawn along other developing countries. Higher demand for commodities resulted in higher prices in the 2000s, consequently boosting incomes in resource-exporting developing countries, including many LDCs. Developing economies as a whole now constitute around half of both global output and global trade (rising from 39% and 32% respectively in 2000).
This growth explosion has greatly contributed to an unprecedented reduction of poverty levels leading to an early achievement of Millennium Development Goal 1 (MDG1) which aimed at halving, between 1990 and 2015, the proportion of people whose income is less than one dollar a day. According to the most recent estimates published by the World Bank, in 2013, 10.7 percent of the world’s population lived on less than US$1.90 a day (the current definition of extreme poverty), compared to 12.4 percent in 2012. In 1990, which constituted the baseline for the MDGs, the proportion of people living in extreme poverty was close to 35%.
Trade and the WTO have contributed significantly to the unprecedented economic development that has taken place in the last decade and a half. Trade has allowed many developing countries to benefit from the opportunities created by emerging new markets, to integrate into the world market through global value chains at lower costs, and to reap the rewards from higher world commodity prices. The WTO has played a key role by providing certainty regarding the commitments of its members, thereby creating a predictable environment that allowed economic activity to flourish. It has also given flexibilities to developing countries to address their specific economic needs and has helped contain protectionism, thus helping to safeguard the economic gains made by developing countries in the past...
