Magazine article International Trade Forum

Future Roles for TPOs: Meeting the Competitiveness Challenge

Magazine article International Trade Forum

Future Roles for TPOs: Meeting the Competitiveness Challenge

Article excerpt

TPOs in a Turbulent

New Business Environment

In a turbulent business environment, the immensity of commercial opportunity will be matched only by the intensity of competition. Buyers' positions will continue to strengthen and exporters' capability to compete will increasingly determine their success. Trade promotion organizations in developing and transition economies need to refocus on competitiveness to help their exporters succeed in the new trade environment.

The world of business has changed drastically in recent years, and there is every indication that it will continue to change. Forceful factors are affecting markets:

* The Doha round of trade negotiations is under way. These will result in greater trade liberalization, in the emergence of a new commercial dynamic and in an inevitable shift in established trading patterns.

* The international marketplace will be increasingly influenced by information and communication technology. Markets will become more specialized, more sophisticated, more efficient and ultimately more demanding.

Total competitive response

In this context, business winners need to offer best quality, lowest price, fastest delivery and greatest flexibility. What are the implications for developing and transition economies' trade promotion organizations (TPOs)? They will have to adopt a total competitive response, addressing:

* "border in" issues of export capacity and competency development within the local business community;

* "border" issues, such as systemic bottlenecks in trade facilitation that increase transaction costs; and

* "border out" issues of market development and promotion, which have been the traditional preserve of the TPO.

This wider, competitiveness-based approach to trade development must replace the market-based focus that many TPOs continue to pursue. TPOs that do not take this approach will have very little impact on future export performance and, in short, are likely to fail. The changing times set another challenge to the TPOs of the developing world: to ensure that export performance makes a significant contribution to overall economic development and, specifically, to poverty alleviation.

Complementary objectives

Competitiveness and development objectives are compatible. Together, they ensure long-term, sustained improvement in export performance, but their compatibility is not automatic. Another challenge now confronting national trade promotion organizations is how to make them complementary. What does this mean for TPO managers?

* First, they must be comprehensive in their approach. A competitiveness-based export development approach requires that trade support be available to the business community at all critical points of the export value chain. Support must be available to enable the exporter to produce, market and deliver more competitively. Support must also be available to the new entrepreneur, to the aspiring entrepreneur and to the export-oriented non-governmental organization.

* Second, they must specialize. General services do not contribute much to competitiveness. Specialized services do.

* The spectrum of services that is needed to sustain export competitiveness at the national level and the investment that specialization implies are beyond the capabilities of a single trade support organization. A multiple-agency approach to export development is required, so, third, they must build a national trade support network.

* Fourth, they must strengthen the network through partnerships, both in-country and abroad. TPO managers must reinforce the network by implementing joint programmes with other specialized trade support organizations, ideally focusing on a specific need within the export community. …

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