SYLLABUS
GS-3: Indian Economy and Issues Relating to Planning, Mobilization of Resources, Growth, Development and Employment.
Context: UNCTAD recently published the Trade and Development Report 2026: The Geoeconomics of Development.
About the Trade and Development Report
- Published by: United Nations Conference on Trade and Development (UNCTAD).
- First published in 1981, the report analyses global economic trends and international trade and development policy.
Key Findings of the Report
- Global Economic Outlook
- Slowing growth: Global growth is projected at 2.6% in 2026 and 2.7% in 2027, compared with 2.9% in 2025. Growth in developing economies is expected to fall from 4.7% to 4% in 2026.
- Trade resilience: Global trade grew 4.4% in real terms in 2025 and is expected to expand by around 4% in 2026, although higher prices partly inflate trade values.
- Uneven recovery: Asia is projected to contribute 59% of global growth in 2026, while many developing economies face energy shocks, high borrowing costs and limited fiscal space.
- Selective Fragmentation of Global Trade
- Geoeconomic competition: Countries are increasingly using tariffs, subsidies, export controls, investment screening and technology restrictions to pursue strategic and national-security objectives. Globalisation continues, but trade and production networks are being reorganised along geopolitical lines.
- Changing trade patterns: Trade between China and the United States has declined by more than 20% between 2024 and 2025, reflecting the reconfiguration of global economic relationships.
- Strategic Investment and Development Finance
- Concentration of investment: Strategic sectors—including AI infrastructure, semiconductors and energy-transition technologies—accounted for 44% of global greenfield investment in 2025, up from 16% in 2020. Developed economies capture around 70% of investment in these sectors, except for critical minerals.
- Declining development assistance: ODA from OECD Development Assistance Committee members is projected to fall by 6.9% in 2026 to $152 billion, marking a third consecutive annual decline.
India-Specific Findings
- Growth outlook: India is projected to grow by 7.3% in 2026 and 6.8% in 2027, supported by robust domestic demand, expanding manufacturing capacity and public infrastructure programmes. Heavy reliance on oil imports remains a vulnerability.
- Strategic investment destination: India accounted for 5.7% of global strategic greenfield investment during 2020–2025, placing it among the leading Asian developing-economy destinations for such investment.
- Industrial policy: India implemented 707 industrial policy measures during 2022–2025, ranking fifth globally in the report’s comparison, behind the United States, China, Australia and Brazil.
- Digital public infrastructure: The report highlights India’s agreement to share its digital public infrastructure with 23 countries, illustrating its role in South–South cooperation.
Key Policy Recommendations
- Strengthen industrial capabilities: Pursue long-term industrial policies that promote technological upgrading, diversification and movement into higher-value segments of global value chains.
- Align finance with development: Mobilise affordable domestic and multilateral finance, manage volatile capital flows and encourage foreign investment that builds local linkages and transfers technology.
- Preserve rules-based trade: Strengthen the WTO’s role in ensuring transparency, predictability and non-discrimination, while protecting meaningful participation and appropriate special and differential treatment for developing countries.
- Deepen regional cooperation: Expand South–South trade, technology sharing, payment systems and trade facilitation; invest in renewable energy to improve energy security and reduce exposure to external shocks.