In a world already burdened by geopolitical tensions, economic uncertainty, and fragile post-pandemic recovery, a new warning comes from a man whose voice carries the weight of global development. Ajay Banga, the President of the World Bank, has urged developing countries to rethink their approach to trade—and perhaps more importantly, their mindset about it.
It’s easy to look at trade as numbers and policies, charts and negotiations. But at the end of the day, it’s about people. It’s about the fruit seller in Karachi who pays more for imported fertilizers because of high tariffs, the textile worker in Dhaka whose factory can’t compete globally, and the young entrepreneur in Lagos who can’t afford machinery because his country hasn’t integrated well with its neighbors.
A Quiet Crisis
While that might sound like a small percentage point to the average reader, in real terms it translates to less opportunity, fewer jobs, and higher costs for everyday people across the developing world. That’s not just an economic fact—it’s a wake-up call. It’s a red flag for young people entering the workforce, for families struggling with inflation, and for governments balancing tight budgets.
Amid this backdrop, Banga has made a simple, almost old-school recommendation: lower your tariffs and talk to your neighbors.
The Illusion of Protection
Many developing countries have long clung to tariffs as a way to protect local industries. The logic is straightforward—if you make imported goods more expensive, your domestic products become more competitive. But in today’s globally interconnected world, that strategy often backfires.
Higher tariffs lead to more expensive raw materials, reduced competition, and less innovation. It’s the economic equivalent of building a wall around your house while the world outside moves on.
And while tariffs might help a few local companies in the short term, they hurt consumers and stifle growth in the long run. The cost of living goes up. The quality of products stagnates. The hunger for progress gets replaced with the comfort of isolation.
Banga, in his remarks, emphasized that many developing countries maintain higher tariffs than their wealthier counterparts—ironically punishing their own people more in an attempt to shield them.
A Shifting Trade Landscape
Complicating matters further is the rise of protectionist policies from developed nations themselves. The recent imposition of a blanket 10% tariff by the United States on imports from all economies, with even higher rates for selected countries, has thrown the global trading system into disarray.
While the Biden administration (and Trump before him) believes these tariffs protect American interests, the ripple effects can be devastating. If other countries retaliate—which they often do—the result is a global slowdown. That’s money not earned, jobs not created, and infrastructure not built—especially in countries that need it most.
The Promise of Regional Trade
But amidst the doom and gloom, there’s hope—and it’s not dependent on Washington, Beijing, or Brussels. According to Banga, the real opportunity lies closer to home. Regional integration—working with neighboring countries to improve trade, reduce tariffs, and share resources—could be the game-changer developing nations desperately need.
Take the African Continental Free Trade Area (AfCFTA) for example. In South Asia, similar potential exists between countries like Pakistan, India, Bangladesh, and Sri Lanka—if only politics could take a backseat to people’s prosperity.
The same applies in Latin America, Southeast Asia, and even parts of Eastern Europe. The closer you trade, the cheaper it gets. The more you cooperate, the more resilient your region becomes to external shocks.
Conversations, Not Confrontations
Banga’s emphasis wasn’t just on numbers but on dialogue. In a time where global leaders often choose confrontation over conversation, this feels refreshingly grounded.
This isn’t just a strategy—it’s a philosophy. One rooted in mutual respect, in listening, in collaboration. Whether it’s about trade routes, tariffs, or technology transfers, the message is simple: talk before you tax.
Real Lives, Real Impact
Behind every policy decision are real human stories. When tariffs increase, so does the price of life-saving medicines in poor countries. When regional trade is neglected, farmers lose access to bigger markets. When businesses fear unstable trade policies, they hold back on investment—killing potential jobs before they’re even born.
And this isn’t just an abstract concern for economists or policymakers. It’s a daily reality for the young woman in Nairobi who dreams of starting an export business, the student in Phnom Penh whose tuition depends on their parent’s factory job, and the small-town Pakistani shopkeeper trying to stay afloat amidst rising costs.
What Needs to Happen Now
To be clear, lowering tariffs isn’t easy. It’s politically sensitive. It involves tough decisions and powerful lobbying groups. But it’s necessary.
Here’s what developing nations can do starting today:
- Review and Reduce: Audit current tariff structures. Identify goods that can be liberalized without hurting key industries.
- Invest in Trade Infrastructure: Better roads, ports, and digital systems can make regional trade smoother and faster.
- Foster Dialogue with Neighbors: Create trade agreements that reflect mutual needs, not just national pride.
- Support Small Businesses: Provide incentives and training to help them benefit from open markets.
- Strengthen Institutions: Transparency and anti-corruption measures will increase confidence and attract investors.
A Future That Feels Possible
The road ahead won’t be easy. But it’s also not impossible. Developing countries have more power than they think. They don’t need to wait for Washington or Brussels to fix the system. They can start by looking inward and reaching outward—toward their neighbors, their regions, and most importantly, their people.
As Ajay Banga reminds us, this isn’t a new discussion. It’s an old truth—dressed in the language of economics but rooted in the simple idea that when people work together, they grow together.
It’s time to replace protectionism with progress, isolation with integration, and confrontation with conversation.
Because behind every tariff, trade deal, or growth forecast, there is a child going to school, a mother buying groceries, a worker hoping for a raise, and a dream waiting to be realized.
