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    Trade Development: Art or Science?

     

     
     
    © International Trade Centre, International Trade Forum - Issue 3/2005

    Photo: Digital Vision

    Many people now agree that there are clear links between trade and development. Yet the debate continues between those leaning towards a structured approach and those seeking a free rein for creativity in trade development.

    Last year ITC celebrated its 40th anniversary. Its magazine Trade Forum has been in existence an equal number of years. In every issue, it highlights and analyses key aspects of international trade development. As can be expected, 40 years of analysis has led to a number of conclusions, which ITC increasingly frames into "best practices". But the question remains: can trade be promoted by using some magic formula, or does it happen because of the ingenuity and drive of a particular individual or combination of individuals?

    The issue: Fostering innovation

    Since the start-up of Apple Computers in the 1970s, the "garage" has become a symbol for numerous success stories of entrepreneurial vision and persistence. A modest structure, created for a different purpose, it was proof that neither substantial financial resources nor physical infrastructure needed to be in place for an idea to thrive and prosper.

    The Lesotho Trade Promotion Unit, when established in the mid-1970s, was also housed in a garage. It had modest equipment and financial means, but plenty of ideas. A stone's throw away from the Ministry of Commerce and Industry, the garage presented an aura of usefulness and simplicity, of independence and pragmatism. ITC assisted in shaping the Unit's work plans and instruments, largely geared towards providing key services to firms. Did it work? Hard evidence is difficult to obtain. But the numbers suggest that it did. Between 1977 and 1981 Lesotho's exports increased in dollar terms on average by 31% a year. The share of non-traditional export products expanded considerably and so did the number of non-traditional markets.
    The focus of ITC's collaboration was clearly on the institution - building institutional capacity to underpin the energy and innovation of the entrepreneur. It focused on "networking" individuals who could make a difference. Was that the right approach? Was it sufficient? Did it work for all developing countries? Not everyone agreed.

    The debate: Does policy reform come first?

    In 1990, the World Bank issued a working paper entitled "DevelopmentAssistance Gone Wrong - Why Support Services Have Failed to Expand Exports". The study was carried out by the Trade Policy Division and concluded that external assistance for trade support services was generally ineffective. It diverted attention from the fundamental need for policy reform, the most important tool to improve national trade performance. Moreover, the authors argued that donors' focus on institution building resulted in permanent trade promotion organizations, poorly suited to countries in an early stage of development. "They even become a vested interest against needed change," said the study.

    Lesotho was not featured in the study, but even if it had been, it is unlikely that the authors would have changed their views. What matters, however, is that the paper sparked a debate which is still very much alive.

    Just one year earlier, the World Bank's Industry Development Division issued a working paper called "Export Catalysts in Low-income Countries - Preliminary Findings from a Review of Export Success Stories in Eleven Countries". The authors conducted firm-level research to define the most critical ingredients for successful entry into international markets. While admitting that the stories were anecdotal, the authors concluded that even in circumstances of large policy distortions, success could occur and could ignite development in an outward-oriented direction. They found that ingenuity and entrepreneurship can overcome policy obstacles and do not require institutional support.




    There's both art and science to organizing successful buyers-
    sellers meetings. Mr Roelofsen briefed Olubanke King-Akerere,UN Development Programme Resident Representative (left)and Rashid Currimjee and Raj Maksoud of the MauritiusChamber of Commerce and Industry (right) during this meeting for the African printing and publishing industry in 1993.
    Photo: ITC




    Our message: Support champions

    ITC has participated actively, often as a leader, in the debate on trade development options. It has undertaken extensive research to ensure that its services have impact. ITC technical assistance is offered in the belief that the world is not a perfect place and that it never will be. There are plenty of distortions that prevent countries and firms from fully exploiting trade potential. But trade will not happen just because of government trade policy directives. Trade will happen through the ingenuity of agents of change, be they individual or institutional. These catalysts set an example for others to follow.

    If a country believes (and many do) that trade development should be spearheaded by a dedicated institution, that institution should be characterized by the same ingenuity as the customers they are to serve. The six winners of the 2004 World Trade Promotion Organization Awards shared some common approaches, one of which was their constant quest for innovation and seamless relevance of their services.
    There is a clear message here for a technical cooperation agency like ITC: if trade development is driven by agents of change, the starting point for any partnership between ITC and its clients should be searching for, and then supporting, those champions. In addition, the partnership must be characterized by the same ingenuity that it intends to foster. Unless ITC is as creative as the partners it seeks, it will be ignored by the best. It cannot, therefore, provide a "one-size-fits-all" approach, but must in every instance offer a tailor-made selection of the most appropriate tools to help agents of change to succeed.

    There are plenty of examples where ITC has been instrumental in harnessing the entrepreneurial spirit of individuals - whether located in institutions or enterprises - for trade development. Last year's anniversary issue of Trade Forum, Portraits of Trade Development, lists some of those. Take the story of flower exports from China: by creating a carefully designed coalition of players in the public and private sector, both in China and abroad, ITC was instrumental in turning one of the country's poorest provinces into a world-class supplier of cut flowers. Another example: when nobody (including myself, originally) believed that the South, with its imperfect trade promotion infrastructure, would offer trade development opportunities, ITC went in with new tools to spot openings for entrepreneurial action. Working with others, it found ways to overcome obstacles and "scoop up" market opportunities across borders in the South - opportunities that were largely ignored by larger and better-resourced companies in the North. The South is recognized as a source of growth in world trade in the years to come. ITC may well have contributed to this healthy trend.

    So, what does that mean? It means that were ITC to live another 40 years, the search for ingenuity and relevance would have to remain a permanent feature, in this magazine and throughout ITC. ITC has never adopted any particular dogma and I hope it never will. Trade development is neither art nor science. Technical cooperation for trade development should not be either.

    Hendrik Roelofsen retired as Director of ITC's Division of Technical Cooperation Coordination in October 2005. He has spent 34 years working to promote trade for developing countries, almost 27 of
    them with ITC.



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