Director, Development Division, World Trade Organization
It is well established that the promotion of knowledge – including through human capital accumulation, development of information technology and communication tools, and promotion of innovation – is a key ingredient for economic development. Governments have a key role to play in building a strong domestic knowledge base by developing capacities and devising appropriate policies and institutions that would facilitate the acquisition, use and absorption of knowledge.
Knowledge is an essential component of the goods and services that are traded across borders. Economic specialization allows in-depth knowledge to be applied to dedicated tasks and functions related to manufacturing goods or to providing services. The result is a broader and more competitive range of goods or services than would otherwise be available if we had to rely on just our own national knowledge. This is good for global welfare and it also helps economic development.
International institutions, such as the World Trade Organization (WTO), also bear a responsibility to help governments achieve their objectives. By setting multilateral rules for trade, the WTO seeks to ensure that knowledge embedded in goods and services flows across borders. In so doing, the WTO implicitly recognizes the importance of knowledge in facilitating economic development. Various WTO agreements in the area of goods and services support the use of knowledge in economic development. Liberalization of trade under the aegis of the WTO has led to a significant reduction of trade barriers, which has facilitated expansion of the cross-border movement of goods and services, and consequently in the movement of global knowledge across borders. This is particularly relevant in the context of the expansion of highly specialized international value chains where knowledge is applied to a very specific task or link in the value chain. Global value chains are important channels for technology transfer, and strengthening of domestic knowledge.
One WTO agreement that deals directly with knowledge is the Agreement on Trade-Related aspects of Intellectual Property Rights (TRIPs). It sets out global minimum standards for the protection of knowledge as embodied in the various instruments that provide intellectual property protection. These standards contribute to the promotion of domestic innovation and foreign direct investment inflows, which are key channels for enhancing domestic knowledge. Additionally, this Agreement contains provisions aimed at facilitating the transfer of technology to developing countries. Another example is the plurilateral Information Technology Agreement (ITA), whose objective is to eliminate tariffs on a range of information technology products. This Agreement has not only made high-tech products more affordable, but it has also helped to promote innovation in developing economies, thereby helping their integration into global production networks.
The WTO also helps in promoting knowledge development and services acquisition is through its technical assistance and capacity building activities that help Members build their trade capacity. In addition, the WTO’s Aid for Trade Initiative seeks to help governments build their supply side capacities and strengthen their trade related infrastructure, which are both key ingredients in ensuring that trade flows, and consequently knowledge flows, increase.