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.
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.
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.
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