Inputs to the Outcome Document

This policy brief explores the challenges of trade fragmentation and inequality in the global economy, focusing on the impact on low- and middle-income countries. It outlines policy solutions to reduce trade costs, invest in infrastructure, promote economic diversification, and strengthen global trade governance. Specific recommendations for the Fourth Conference on Financing for Development (FFD4) include financing for trade infrastructure, bridging the digital divide, improving access to finance, and reducing trade barriers to foster inclusive and sustainable development.

By grounding policy decisions in solid evidence, countries can better navigate the complexities of tax reforms and ensure that their strategies effectively support the financing of the SDGs. Administrative data and ex-ante policy modelling, such as tax-benefit microsimulation modelling, are indispensable in providing a full picture to policymakers. Data and modelling infrastructure should be public goods accessible to the government and its agencies, academia, think tanks and CSOs to enable an inclusive debate about the choices governments face when making decisions on tax and benefit policies.

To realize their domestic revenue potential, countries need research and technical cooperation. International organizations and bilateral donors provide essential training and resources to strengthen tax administrations and skills for policy analysis in government and academia. Governments in the Global South can progress faster towards the SDGs by partnering with experienced institutions. Technical assistance and research collaboration are key, with hands-on learning from experts. Collaborative efforts, including South-South and North-South partnerships, are crucial for establishing robust policy analysis and research infrastructure in the Global South.

Remittances and diaspora investments are a major source of external private finance crucial for achieving SDGs, but their full potential remains largely untapped. Member States should acknowledge their potential and renew and expand their commitments to maximize their impact to development, ensuring access to formal, affordable, and secure remittance services through supportive regulations, improved payment systems, digital solutions, and promoting financial inclusion for both migrants and their families back home. At the same time, Member States should facilitate and support diaspora investments to homeland SMEs by creating diaspora engagement strategies and supportive environments, capacity-building for diaspora members, involve them in policy development, remove investment barriers, and provide adequate mechanisms to crowd in their investment.

This policy brief addresses the $1.5 trillion global trade finance gap, which disproportionately impacts small and medium-sized enterprises (SMEs) in developing economies. It outlines key challenges, including high rejection rates and compliance costs, and proposes targeted solutions such as expanding risk-sharing frameworks, strengthening local financial institutions, and promoting climate-friendly trade finance. The brief emphasizes the need for multilateral cooperation to close the gap, promote inclusive growth, and support the transition to a low-carbon global economy.