Countries should foster open markets to boost productivity, increase wages and stimulate the economy in this fragile global context, says the Organisation for Economic Co-operation and Development (OECD).

In its ‘Policy Priorities for International Trade and Jobs’ report, the OECD points out that protectionism and closed markets usually result in slower growth, whereas open trade positively affects the labour market.

For example, factory workers in open economies have been shown to earn three to nine times more than those in closed economies, the report adds.

OECD secretary general Angel Gurria says: “In today’s challenging policy environment of a hesitant recovery and slow job creation, market openness can be a critical element to boost growth and employment. Trade liberalisation has historically gone hand in hand with better economic performance when accompanied by sound institutions and effective employment and education policies, in both developed and developing economies alike. Opening up further will benefit workers, firms and consumers.”

The report shows that offshoring in the UK, US, Germany and Italy has had either no impact or a positive impact on employment – calling fears that the practice might have negative side effects “exaggerated”.

Similarly, the OECD refutes concerns that free trade might affect jobs in importing countries. “There is no systematic link between imports and unemployment. Instead, evidence shows that in country after country, both exports and imports push productivity growth upward while helping create better skilled and higher paying jobs,” it says.

However, the organisation adds that opening trade is not enough to foster economic recovery, citing macroeconomic policies, a positive investment climate, flexible labour markets and adequate social safety nets as other necessary measures.

The report comes after the publication of the OECD’s latest economic outlook, which forecast reduced GDP growth in 2012 (1.6%, from 1.8% in 2011), followed by recovery in 2013 (2.2%), and warned that the eurozone crisis could spread to other regions if no action is taken. The OECD recommended implementing structural reforms in education, innovation, competition and green growth, and said EU member states should find the right balance between spending cuts and revenue increases.