Trade Promotion Organizations: A Variety of Approaches

Article excerpt

According to research and advisory work undertaken by ITC over the past several years on national trade promotion organizations (TPOs), these institutions differ considerably throughout the world in their structure and functions. Although some organizational patterns may be more prevalent in developing countries than others, no single model stands out as one that could be applied with equal success across the board. Instead experience shows that the most appropriate institutional setup is one that is adapted to the given situation in the country concerned.

Some of the findings of ITC's research on trade promotion organizations, including a survey recently conducted among more than 100 such entities in both developing and developed countries, are summarized below. They may be of particular interest to trade promotion authorities and business organizations that are reviewing their own institutional framework for trade promotion.

Types of organizations The TPOs surveyed by ITC are of two types: public organizations and private bodies. The former are the more numerous, with private-sector TPOs being the exception.

Among the public institutions, several different organizational patterns exist among those studied. Some TPOs are part of an existing governmental entity, while others are autonomous or semi-autonomous.

Within a ministry:

Of the TPOs located in a ministry, basically two approaches are used:

* The TPO is a section in the ministry. This arrangement is often looked upon as a first step towards the creation of a full-fledged TPO. Of the institutions surveyed, five follow this pattern. Some of these are in the ministry of trade and industry or the equivalent, one is in the ministry of foreign affairs and another in the ministry of economy.

* The TPO is a department, division or directorate within the ministry, with more powers and autonomy than those of a simple section within the ministry. This pattern is found in 26 of the countries surveyed. Again, a large portion of these are in the ministry of trade and/or industry.

By creating an export promotion unit within an existing ministry, as mentioned above, many developing countries start their export promotion efforts on an experimental basis. In spite of the fact that this is initially considered a temporary solution, in most cases the TPOs remain part of the ministries concerned for many years.

Several factors favour the creation of a TPO within a ministry. One is that the TPO can usually be established by a ministerial decree, without complicated legislative measures. Furthermore, it can be funded through allocations from the regular ministerial budget, thereby avoiding the need for a separate budgetary process.

A unit of this type, however, often lacks the autonomy and operational flexibility desirable for implementing substantial trade promotion activities. Being an integral part of the ministry, it must follow standard procedures of the ministry in its operations and staffing. It does not therefore have the freedom to mobilize financial and human resources at will. This approach should be considered mainly a temporary measure, pending the establishment of a more autonomous entity over the medium to long term as discussed below.

Autonomous institutions:

The establishment of autonomous institutions ascribed to ministries is the most frequently used approach for a trade promotion organization among those surveyed. If adequately implemented, this arrangement is often the most effective of the various options. One reason is that it tends to stimulate a closer relationship between the business sector and the TPO than is the case with a ministerial unit. Under this system the TPO can remain autonomous, but at the same time the ministry can maintain its required control to comply with public administration procedures. The success of this approach depends considerably on the support that the TPO receives from the government, the qualifications and experience of its chief executive officer, and the extent to which it is autonomous in practice with regard to funding, employment of staff and the implementation of promotional activities. …

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