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    Creating Wealth, Reducing Poverty


    International Trade Forum - Issue 2/2007, © International Trade Centre

    © Reuters/I. Naymushin

    A key to transform economies and meet the Millennium Development Goal to end poverty by 2015 is ensuring that trade becomes part of development policy, with a central role for women and small business.

    A change is under way. Business, government and non-governmental organizations (NGOs) have realized that they must join forces if they are to tackle one of the biggest moral challenges of this century: ending poverty. Central to this challenge is creating wealth through trade.

    Developing countries understand that to help their businesses grow, they must move beyond connecting producers with buyers, beyond supplying coffee beans to the agro industry or handicrafts to tourists. They need to add value to their exports, look for new market opportunities and define the marketing and branding strategies that will help them create new, profitable business that produce sustainable jobs.

    Transforming potential into export capability

    What is ITC doing to bring trade into development plans? How can we help developing countries to reduce poverty by taking advantage of the many opportunities associated with global trade? How do we release the vast potential of small and medium-sized enterprises (SMEs) in developing countries?

    ITC works with countries to build trade support capacities which transform potential into real export capability. We help them to gain access to an information infrastructure so that their firms understand market opportunities and can make educated business decisions.

    But ITC alone cannot bring about change. To begin to tackle poverty, we work with partners, including local government authorities, NGOs, communities, financial institutions, international organizations and the corporate world. We also need to ensure that our projects are tailored to local situations - a one-size-fits-all approach will not succeed.

    By working with our partners to reduce poverty, we can help the private sector in our member states to create better jobs with sustainable incomes. Our demonstration projects illustrate the possible and should be a catalyst to other small businesses in developing countries.

    ITC can point to some striking examples of poor communities that have managed to trade their way out of poverty. In Brazil's most popular tourist resort, for example, a project run by ITC and its partners has introduced a process through which thousands of people in eight very poor communities now sell agricultural products, produced under conditions that meet international health and safety standards, to the resorts. They provide cleaning and garden services; produce world-class craft items; and provide entertainment based on local culture. The project is an innovative partnership between big business, governments, NGOs and international organizations and illustrates how foreign direct investment can be a catalyst to transform marginalized communities.

    Our work at the International Trade Centre points towards three imperatives that can help reduce poverty through trade.

    1. Bring trade into development plans

    • Concentrate on the most vulnerable. We have committed more resources to the least developed countries, small island developing states and post-conflict nations, to define with them their trade priorities in order to create export development programmes designed to help them grow small business and reduce poverty.
    • Include trade as part of UN country strategies. Today, only 10% of UN Development Assistance Frameworks mention trade. If the designers of these country development strategies have no interest in trade, it will not be mainstreamed into the development agenda. We have to ensure that the voices of those actually involved in trade are heard and that ITC and our trade partners are present when these frameworks are being put together.
    • Support "Aid for Trade". Donor countries have promised significant funds for Aid for Trade as part of the Doha Development Agenda. This includes more funding to develop business skills and productive capacities. ITC has an important role to play in providing export development services to trade support institutions (TSIs) so that SMEs in developing countries can sell competitive goods and services into global markets.
    • Promote the Enhanced Integrated Framework. The Enhanced IF is a cooperative trade policy framework for the world's poorest countries. ITC has played - and continues to play - a role in this country-based approach, which aims to reconcile trade, development and finance, since its inception ten years ago.
    • Empower trade support institutions. Trade development cannot take place without a strong infrastructure of trade institutions. Our main focus at ITC is building capacities in TSIs to support enterprises and bring the voice of business to policymakers. We will continue to do this but will work with them to develop a pro-poor approach.
    • Build strong partnerships. Our technical assistance efforts are about building strong partnerships in ITC's fields of competitive advantage: private sector and competitive export development.
    2. Encourage business

    The voice of business in trade and development debates is essential. Businesses in developing countries face tremendous odds in today's trade environment. Competition is fierce, with China, India and Brazil already transforming the way business is done in the 21st century.

    While the number of business briefings before major WTO meetings has risen since the Doha Development Agenda negotiations began, there is a long road to travel to bring the voice of business fully into trade and development debates. For instance, political leaders often receive economic analysis when discussing development strategies, but not the views of small business.

    We need the socially responsible multinational companies of the North and South on board if small business is to grow and create wealth for the developing world. Multinationals should stand ready to expand their supply chains to SMEs that meet their quality standards. Encouraging business linkages builds capacity in local SMEs and can lead them to becoming part of global supply chains.

    3. A stronger role for women

    Bringing women exporters into the mainstream is key to driving down poverty. Our research shows that they are typically social-minded entrepreneurs. But their numbers are too few. They lack knowledge of export opportunities, or face cultural, financial and legal barriers, simply because they are women.

    Few trade development programmes currently tackle these issues head-on, but ITC will strive to ensure that gender issues are taken into consideration as projects are planned.

    The majority of the world's poor are women. If we believe that trade is a means of generating wealth, then having women and small business at the table is key to improving the lot of the poor from the very start. The trend may be moving our way: big business is realizing that social responsibility, especially in developing countries, is key to their business strategies, and NGOs now use business models to link community projects to global markets. By working together with our partners to link trade to development strategies and by ensuring that women and small businesses are empowered to take advantage of global trade opportunities, we will have taken a big step forward to reducing poverty and creating wealth in the world's poorest countries.