Everyday life is easier because of certain types of standardization: you buy something with an electrical plug, and it fits the socket on your wall. But beyond issues like using common weights and measures, standards can be transformative for economic growth. The World Banks’s, World Development Report 2025, “Standards for Development,” explores the big picture role of standards–as well as the danger that standards can be used by incumbents to hinder competition from entrants.
One can make a plausible case that for the wave of globalization in the last half-century or so, the standardization of common containers was more important than all the inter-governmental negotiations about global tariffs. The report notes:
[T]he real revolution came quietly—and relatively recently: from a US trucking entrepreneur named Malcom McLean in the mid-1950s. Until then, goods were transported using methods that had hardly changed over the centuries. Cargo had to be loaded piece by piece, using crates, sacks, or barrels, onto carriages, trucks, trains, and ships. At each stage, everything was hauled off of one vehicle and then reloaded onto the next, usually with different types of specialized equipment. McLean standardized the humble steel box, readying it for easy loading and shipping across all forms of transportation: road, rail, air, and sea. In doing so, he crushed handling
costs and delays: The cost of shipping fell by at least 25 percent. The risk of theft and damage eased. If treaties set the stage for the rise of globalization after World War II, McLean’s container made the show possible.McLean’s standardization did not just tidy up shipping. Standard containers gave the world a common commercial language. A container sealed in Shanghai could roll off a ship in Rotterdam and onto a truck, rarely opened or even touched by human hands. Standards turned chaos into order, unleashing the economic miracles of just-in-time manufacturing. Ships got bigger. Supply chains proliferated. Commerce surged. McLean then turbocharged the process by granting free licenses to his container patents to the International Organization for Standardization (ISO).
In 1965, ISO codified almost everything about the containers: dimensions, stacking rules, twist locks, strength, and lifting. Suddenly, there was a single playbook—and global interoperability.
The payoff was extraordinary. Containers delivered a permanent boost to trade: a 1,240 percent cumulative jump in trade among advanced economies after 15 years: by many estimates, more than the combined effect of all trade agreements of the previous half century. Across 22 industrial countries, standardized containers lifted bilateral trade by 300 percent in just 5 years and nearly 800 percent in 20. That far exceeded the 45 percent from bilateral free trade agreements over the same 20 years and 285 percent from membership in the General Agreement on Tariffs and
Trade (GATT), the precursor to the World Trade Organization (WTO).
Love globalization? Hate it? Either way, the underlying impetus is more about Malcom McLean than about WTO negotiations.
The report discusses all kinds of standards: environmental, banking, accounting, interoperability, performance, safety, reliability, testing, and more. Such standards are often an important part of forcing real competition between producers, as well as developing economies of scale. But there is an element of push and pull here. In many countries, the history of economic development is also a history of standardization. On the other side, the same standards may not apply well at all times and places–and can even end up as a tool for giving an advantage to existing firms.
For some historical examples of the link between standards and development, the report points out:
As a new sovereign nation in 1947, India launched its first National Sample Survey of living standards in 1950. The survey revealed a striking lack of standardization of weights and measures in the country’s rural areas: 143 different systems for measuring weight, 150 different systems for measuring volume, and 180 systems for measuring land area. The lack of consistency that was hobbling India’s economic union paralleled the mayhem in France before the metric system established order there; in the 1700s, France had about 250,000 local weights and measures.
In such settings, a common standard of weights and measures enables markets to function at scale. Or here’s a story from the 20th-century US experience:
It was also the government’s drive for “simplification,” initiated during World War I, to push industry toward compatibility: standard (fewer) sizes and mass production. Industrial standards in the early 1900s were mostly in house; fragmentation was rampant, fed by a tangle of state and local rules and custom-made orders. Mattresses came in 78 sizes in 1914; within a decade, that number had fallen to 4 for 90 percent of output. Wartime agencies, working through trade associations, slashed product variety across some 250 lines in 18 months.
President Hoover revived and institutionalized the effort in the 1920s, creating the Division of Simplified Practice as a neutral broker for voluntary, industrywide standards. Early wins—paving bricks, mattresses, bedsprings—cut varieties by more than 90 percent. By the early 1930s, 135 Simplified Practice Recommendations were in place, growing to 173 by 1939 and 267 by 1971. Each one tightened the link between design and efficiency, reducing waste, cutting costs, and freeing up capital for innovation. Compatibility standards powered the US leap in mass production and consumption, turning variety into scale and waste into efficiency. What looked like a technical exercise was in fact an economic policy of uncommon power, one that quietly multiplied productivity across an entire economy.
The authors also point out that standards can end up limiting competition in some cases. A few examples from my own mind: back in the 1970s, Sweden had rules that cars had to have wipers on the headlights, which many foreign producers of cars did not; in Japan, stringent standards have had the effect of limiting imports of rice. This report focuses more on standard adoption in developing countries. It points out that standards are often drawn up by the high-income countries of the world. The costs of complying with these standards–sometimes called an nontariff barrier–are often a bigger hindrance for developing countries to participate in global trade in certain products than actual tariff rates.
Perhaps the best kinds of standards are those that, most of the time, can be taken for granted.
