Trade and Economic Development
Trade is a powerful tool for economic development providing for increasing economic growth and consequently reducing poverty. Promoting the link between trade and development consists of identifying the best way to integrate more countries in the global market and establish a more just, transparent, and regulated system of international trade.
This is particularly the goal of the Doha Cycle for economic development conducted by the World Trade Organization (WTO), begun in 2001, and whose completion would constitute progress in this direction. The United Nations Conference on Trade and Development’s (UNCTAD) work also contributes to reinforcing this link.
Recently, several developing countries have widely benefited from their integration in the global market thanks to growing exports and diversified economies, which have contributed to a virtuous circle of investment, innovation, and poverty reduction. Asia, particularly the New Asian Industrialized Countries (NAICs) have demonstrated the virtues of opening to the world. Indeed they have successfully made their place on the markets in industrial countries due to their comparative advantage in salary costs and increasingly qualified labor. They are exporting increasingly sophisticated manufactured goods, with high added value, and their development has occurred without excessive indebtedness.
However, developing countries are a heterogeneous group and significant disparities exist between them: Less Developed Countries (LDCs), Medium Income Countries (MICs), emerging countries, which already form, for many observers, a different category.
LDCs, particularly in Africa, have little benefited from trade dynamics in terms of exports and their GDPs and foreign trade remain largely deficit-making for several reasons including:
Their exports are subject to a limited number of low added-value products, particularly raw materials, for which the price, until recently, brought little compensation and / or was subject to significant volatility;
Weakly competitive products;
Technical difficulties for implementing standards and origin rules which complicated their access to the global market;
Lastly, export income management with little effect on local investment.
The question of the offer’s quality and competitiveness is due to a series of recurring problems in LDC economies: failing infrastructures, lack of or prohibitive credit for businesses, insufficient human capacities, out-dated and low-performance technologies, weak public and private capital accumulation capacity...
Therefore sustainable solutions must be identified for these structural programs, to allow LDCs to benefit from the positive effects of trade liberalization.
Particularly, the “Trade Assistance” initiative launched by the WTO in 2005 has provided for promoting the awareness of the support these countries need to reinforce their ability to create genuine gains from their trade activities.
Special and differentiated treatment (pricing and trade preferences) that they benefit from under trade agreements is another response by the international community that may facilitate a more beneficial insertion of these countries in the global market.
Lastly, the negotiations regarding the Economic Partnership Agreements (EPAs) between the European Union and the Africa - Caribbean - Pacific (ACP) countries enrich the debate on this issue. Indeed, they include economic development, not only as the purpose of the agreements, but also as one of the components.
On all these issues, France plays a very active role. In its conclusions dated June 5th, 2009, the CICID indicated that France will reinforce its action with regards to trade assistance, beginning in 2010, by setting a collective goal of increasing French financial efforts by more than 50% over the reference average during the 2002-2005 period.
With regards to EPAs, France has always indicated that they should be designed as economic development instruments that, in compliance with WTO rules, should lead to a more beneficial integration of ACP countries in the global economy.
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Updated on 21.01.10