Trade promotion organizations (TPOs) have proven their worth over the last decade in the rapidly changing nature of world trade. A recent study found that TPOs have a 'strong and statistically significant impact on exports'. After examining 104 TPOs around the world, the study estimated that, on average, each $1 spent on export promotion led to a $40 increase in exports.
These positive sentiments were echoed at the World Conference of Trade Promotion Organizations, which took place in The Hague in October 2008. Against a backdrop of the global economic crisis, rocketing oil prices, increasing food scarcity and accelerating climate change, the conference strongly reinforced the critical role of TPOs in contributing to national economic growth.
The Conference--an important informal network for sharing of TPO best practice--highlighted the window of opportunity for TPOs to take a leadership role in the vacuum left by the lack of consumer and investor trust.
However, making a difference to export growth can be a challenging task for TPOs in some developing countries. TPOs are increasingly required to quantify their outcomes and to be held accountable for their results. If they are to achieve expansion of trade and reach new clients--and satisfy their governments (or donors) that they are doing their job--they need to be visible and well connected to the private sector.
It is normal for TPOs to be tuned into specific areas of competitiveness and opportunity in their home economies, and to focus their resources accordingly. However, the most effective TPOs also identify opportunities--for example, in sustainable trade or corporate social responsibility--and obstacles to entering new or emerging markets and work out the best way to facilitate access to those opportunities for their exporters (what Grant Aldonas, in his article on p7, describes as creating an 'enabling environment').
Bringing value to exporters
The higher the hurdles, the greater the value TPOs can deliver. By using the tools of trade promotion, such as national pavilions at specialized trade fairs and trade missions, TPOs can shepherd their companies into the most appropriate sectors. This also serves to highlight areas of national competitiveness, and enables exporters to gain leverage off this awareness through their own promotional efforts. Take, for example, China's capability in low-cost manufacturing, or the reputation for information technology in the United States.
Accurately assessing the market-readiness of exporters is also vital if resources are to be used effectively. For example, some TPOs provide self-paced assessments online, which are useful because they take participants through key issues that might not have even occurred to them.
The Internet has revolutionized access to information but only skilled and experienced staff can provide real understanding of market structures, the respective strengths of channel operators, and reputation and capacity to perform based on assiduous investigation on the spot.
Constantly innovating to develop new products and services that meet the needs and demands of clients is critical to the ongoing success of TPOs. As can be seen from the TPOs receiving 2008 World Trade Promotion Organization Awards in The Hague [see p6], the best performing TPOs are constantly responding to client demand, are success oriented and have a strong affinity with their private sectors.
Success factors for TPOs
Recognition and support (including adequate funding) from sponsoring governments is critical. There must be a sophisticated understanding of the TPO's role among the country's leadership, and active involvement to produce system-wide engagement and support. National economic policy should also direct resources into industry sectors that have growth potential, not into propping up industries that are inherently disadvantaged. …