TRADE AS A TOOL FOR DEVELOPMENT;
HOW CAN DEVELOPING COUNTRIES BENEFIT
MORE FROM THE MULTILATERAL TRADING SYSTEM?
ITC firmly believes in
trade as a tool for development. In order for developing countries and
transition economies to increase their participation in global trade, they need
to focus on three export prerequisites: market access, marketable goods and
services to export and export skills.
A great deal is being
said about globalization and what developing countries and transition economies
should do to participate more fully in the world economy. But what specifically
needs to be done? In my view, there are three pre-requisites to enable
developing countries to fully participate in the world economy. They are:
·
market
access;
·
goods
and services to export; and
·
export
skills.
Changing Scene
Market access is
negotiated between countries. In the past it has often been difficult for
developing country suppliers to obtain access to markets in industrialized
countries, which have tended to favour their own country’s suppliers. This is
changing. Recent initiatives by the European Union, the United States and the
Fourth World Trade Organization (WTO) Ministerial Conference in Doha, Qatar in
November are providing new impetus to substantially increase market access for
developing countries in areas where they can best compete.
The second requirement is
having marketable goods and services to export. These result from creativity,
innovation, technology and capital investment which are critical elements for
success.
Creativity exists in
abundance in developing countries. Indeed, time and time again, these countries
have found highly innovative and imaginative ways to tackle situations that are
dealt with more traditionally by industrialized societies. Putting this capital
of imagination and creativity to work for export is something developing
countries need to do more systematically.
The cost of access to
technology, particularly new information technology (IT) is falling all the
time. Last year, the Executive Forum organized by ITC in Montreux, Switzerland,
focused on “Export Development in the Digital Economy”. It gave plenty of
examples of developing country exporters who have entered world markets through
the creative use of information technology.
The Key: Good Ideas
Capital is equally
important. Even in these difficult times, it is interesting to see how much
capital from around the world is being directed at seeking out good ideas,
large numbers of which will be found in developing countries.
I believe this is a trend
that will both continue and strengthen in coming years. There was a time when
big firms, or big fish (for the sake of illustration) used to eat small fish;
nowadays fast fish eat slow fish and these fast fish are found in both North
and South. Fast fish are the result of creativity, innovation, technology and
capital.
In my view, this is where
developing countries have a unique opportunity to win a greater share of the
global economy. ITC can help these countries improve their responsiveness to
new demands by assisting with identifying new markets, pointing to
opportunities to adapt and diversify products and by focusing entrepreneurs’
attention on the export potential of the services sector, which is one of the
fastest-growing areas of world trade. This will be further enhanced by the use
of appropriate information technologies. As a result of improved telecommunications
coverage, it is foreseen that increasingly many call centres, back office
services, information services, as well as data-entry and processing functions
will be located in developing countries.
Export Skills
The third requirement for
countries to be able to succeed in export markets is possessing both export
skills and the ability to deliver export products and services. These are just
as important as market access, since on its own, market access makes little
difference. Despite the market privileges they have been granted for years, the
poor performance of African, Caribbean and Pacific countries in European
markets brutally reminds us that gaining market access alone is not sufficient.
Strengthening Links
Trade development also
involves more than just export promotion. Evidence suggests that in successful
economies, trade support extends to attention to exporters’ supply chain
operations and issues, which usually takes the form of dialogue with supply
support institutions.
Export capability is only
as strong as the weakest link in the chain. This may seem to be a logical
assumption, but few developing country enterprises give it much attention until
their first supply or delivery crisis arises.
All contributors to the
export supply process share the responsibility for good export performance and
dependable delivery. Each exporter effectively acts as an ambassador to the
outside world for the country’s industry and products. Poor performance or
misleading actions will affect the reputation of all suppliers in the country,
making it much harder to win the next export deal. Increasingly, buyers set
quality and other standards, the effects of which extend upward to an
exporter’s suppliers and across to associated trade services such as packaging,
insurance, warehousing and transportation.
Domestic suppliers of
services and materials must be involved in information-sharing and learning
processes. In this area, since we cover both the export promotion and supply
chain operations aspects of international trade, ITC is uniquely placed to help
enterprises and trade support institutions in developing countries and
transition economies.
ITC’s Tools For Trade
Following on from the
importance of market access and exportable goods and services, the next focus
needs to be on export delivery skills. During almost forty years of hard work
with developing country exporters, ITC has learned a number of lessons about
things to do and things to avoid. We have incorporated these experiences into a
series of products, or “tools for trade”.
ITC’s tools for trade
help entrepreneurs improve their export skills by helping them identify goods
and services for export; by providing assistance with selecting niche markets;
and by guiding the international marketing effort.
We do this by providing
training in all aspects of exports, including trade financing, quality
standards, packaging, trade laws, marketing, international supply chain
management, using new information and communications technologies and by
providing improved strategies to promote export services successfully.
Involve the Private Sector
One of the key elements
for success is the existence of a solid national export strategy. Furthermore,
to make this trade strategy effective, the private sector must be drawn in and
totally involved and committed to the overall process. This requires more than
mere consultation; the private sector must be a full participant in every step
of the process. In other words, it must “buy in” and feel jointly responsible
for the success or failure of the strategy. The public sector cannot do it
alone. There must be a real and effective partnership between the public and
private sectors in this process. This does not happen easily in any country.
Mistrust between public- and private-sector institutions is frequently found
throughout the world. This mistrust has to give way to understanding, trust and
genuine collaboration.
Effective collaboration
between the private and public sectors will avoid the occurrence of unnecessary
obstacles to trade and inefficiencies in export processes. The examples of
other nations show that all successful exporting countries have developed
intense public-private teamwork and strong information-sharing networks
covering the entire export supply chain from marketing to fulfilment.
Finally, while it is
clear that export skills can certainly be acquired, they do not just
materialize without effort. Determination to succeed and perseverance are
essential. Export is a game and, like any other game, no one can become a
champion without practising intensely. Trying, failing and trying again is part
of the game. Part-time players never become champions, but those who take the
game seriously and play it hard and long enough, do become champions. ITC will
always be pleased to help future champions to the maximum of its ability.
* J. Denis Bélisle is ITC’s Executive Director. This article
draws from the speech he gave at the Global Economy Seminar in Egypt (Cairo, 3
October 2001).
** International Trade Forum, Issue
4/2001, pp.4-5.
*** Required permission for
re-publication was taken from the ITC. The translated Turkish version of the
article is available at: http://www.akademiktisat.net/calisma/dis_ticaret/gelisme_ticaret_gou.htm