Magazine article International Trade Forum
JUMPSTARTING TRADE IN LDCs
LDC businesses need help overcoming supply constraints to spur export growth.
Over a period when the world economy has generally been growing and diversifying, the share of least developed countries (LDCs) in world trade has shrunk to the present 0.4%, down from 0.7% in 1985. Despite schemes to improve market access for LDC exports - such as Canada's Market Access Initiative or the European Union's Everything But Arms initiative - most countries remain unable to tap into new opportunities.
Why? To boost LDCs' participation in the world economy, market access is necessary, but it's not enough. LDCs depend heavily on primary commodities and low value-added exports, which have seen steady price falls. Higher-value goods and services that match the more profitable trade opportunities are not the norm in LDCs, and neither is the capacity to develop them.
Severe "supply-side" constraints block business development. Often, LDCs' policies are not supportive of trade, nor is trade integrated in their overall development strategies. They have limited capacity to formulate strategies that diversify exports in response to changing demand. LDCs lack trade support services in key areas such as trade financing, quality management, trade information and marketing, which can help firms compete in the international marketplace. Weak physical infrastructure to support trade - roads, ports, energy and telecommunications - is a handicap to growth. Finally, enforcement of the rule of law and greater transparency to reduce corruption often remain problem areas for business.
Despite the major challenges LDC exporters face, some have succeeded in exploiting new business opportunities through entrepreneurship and perseverance. Their successful exports range widely, from back-office services to perfume essences and tourism. Governments and bilateral and international agencies must work together to improve the environment for more entrepreneurs to emerge and grow. …