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    Trade Must Extend to Poorer Countries

     

     
     
    © International Trade Centre, International Trade Forum - Issue 1/2001

    Rapid globalization, new forms of business alliances and communications developments are reshaping the international trade landscape, and bring new business opportunities between developed and developing country firms.

    J. Denis Bélisle, ITC's Executive Director, and Michael R. Czinkota of Georgetown University's McDonough School of Business outline why we should respond to these trends, and indicate some of the steps ITC is taking to help developing countries benefit from the unprecedented new volume of international trade.

    In the growing world economy, the North can no longer rely solely on trade led by Fortune 500 corporations. Trade must also increase in the South if all are to bene-fit from a growing world economy. Policy makers and businesses of all sizes must realize the strategic importance of the developing world, not just from the traditional sociopolitical perspective, but from the perspective of fostering an integrated global economic framework. It is in every-one's best interest to respond to global trends in ways that will foster growth in all countries, including the least developed ones.

    Why? Simply put, trade between firms in developing and developed countries provides the margin for expanded opportunities for trade and investment. There is a mutuality of benefit in trade, an inextricable link that contributes to economic development in all countries. Companies that export to developing countries will expand into new markets, reaching consumers with increasing purchasing power. Companies importing from developed countries will gain access to high-quality, lower-cost products that improve their competitive edge.

    Yet the question remains: How is it possible to help developing countries while letting market forces prevail? Based on extensive research into trends in international business conducted at Georgetown's McDonough School of Business and on practical experience gained at the International Trade Centre, this article identifies issues in international trade that will affect developing countries, outlines some initial steps taken by ITC to help businesses and countries benefit from these global changes, and presents an opportunity not to be missed.

    The three most important dimensions are trends in globalization, new forms of partnership and the rapid development of information technology.

    Globalization

    Worldwide manufacturing and out-sourcing strategies have made the production of goods cheaper, faster and better. To compete, producers must be able to measure levels of competitiveness and correct weaknesses. This requires market information, an ability to understand and forecast demand and creativity in adapting products and finding a market niche. These requirements add up to three strikes against developing countries. They have serious limitations in research and development, great difficulty in accessing trade information and often lack sophisticated marketing skills. Creativity and new technologies, on the other hand, present these countries with unique opportunities to catch up with the industrialized world. Harnessing these for the benefit of developing countries is a collective challenge.

    Competitiveness is the sine qua non of success anywhere. Yet to become competitive, firms in developing countries must be able to measure and evaluate their performance. ITC has therefore developed a "competitiveness gauge" that enables firms in developing countries to compare themselves to baseline data from manufacturers around the world. Producers can compare their production, organization and practices with those of enterprises in the same sector, and know where to improve their performance.

    New forms of partnership

    As developing countries foray more deeply into the global economy, intense teamwork between business and government and among business people themselves has become imperative. Firms and governments must bury their mistrust and communicate constructively on strategies and collaboration. At the firm-to-firm level, businesses must begin to share costs and lessons learned. An emerging trend in the industrialized world is for companies to share the costs of assets such as infrastructure, buildings, employees, storage, transport, repairs, telecommunications systems and the joint marketing of complementary products. Developing countries have to find their own models for joint ventures, value-added partnerships, strategic alliances and cooperative agreements. These are the ways of the future where risks are shared and partnerships rule the day.

    ITC has pioneered tools for developing-country exporters that address criteria for successful cooperation between the public and private sectors, as well as with non-governmental organizations and agencies such as trade promotion organizations and industry associations. Akin to Pareto's 80:20 rule, these tools are kept 80% the same while 20% are customized to respond to local needs, thus achieving economy and customization in a partnership-based approach. The Executive Forum on National Export Strategies held by ITC in autumn 1999 provided a unique opportunity to review success stories of partnership-based and export-led global development strategies.

    Harnessing communications

    Countries without efficient telecommunications infrastructure were long seen as doomed and excluded from benefits of electronic commerce such as faster service and shipment, more precise order transmittal, online interaction in the production process and specific forecasting of supply and demand. Yet the lack of up-to-date communication is no longer a permanent handicap. It used to be that governments regulated and controlled communication (and postal) services because only they could afford to. Today, the investment required to establish a basic national telecommunications system has fallen drastically, allowing private firms to bring telecommunications to any country - and to do it within two years. The question is not if, but when, developing countries will participate in and benefit from trade based on global telecommunications.

    As developing countries become ready to participate in the new electronic economy, ITC serves as their one-stop shop for guidance on implementing commerce strategies. It offers advice on cybermarketing, international purchasing, quality and logistical aspects of e-commerce for agricultural and manufactured goods as well as services.

    Responding to needs identified through research, ITC offers programmes that can match exporters and importers of fresh fruit and vegetables, profile successful service-export strategies, sponsor online exhibitions of products from developing countries and provide answers to commonly asked questions regarding e-commerce.

    The implementation of the World Trade Organization multilateral agreements has brought about unprecedented growth in international trade. Helping developing countries to capitalize on it is essential. They must be assisted in practical ways to catch up with the industrialized world.

    Developing countries have to be part of the surge in global well-being, and they are ready to assume the responsibility of becoming successful partners in the global business community. As a result of profound changes under way in globalization, tele-communications infrastructure and technology, industrialized countries would be well advised to trade with firms in developing countries, not only to enhance trade and investment opportunities in this promising, prosperous world of ours, but to lower production costs, extend product life cycles, reduce costs of importing components, services and manufactured goods and expand market access. Otherwise, chances for development, growth and stability will be jeopardized for all, North and South alike.

    J. Denis Bélisle is Assistant Secretary-General of the United Nations in Geneva and Executive Director of the International Trade Centre UNCTAD/WTO. Michael R. Czinkota teaches at Georgetown University's McDonough School of Business in Washington, D.C.

    ITC Encourages Reprints

    This article has appeared in the Japan Times and The Journal of Commerce in the United States. ITC encourages readers to reprint Forum articles locally. Please send two copies to the Editor, Trade Forum, ITC, Palais des Nations, 1211 Geneva 10, Switzerland. E-mail: domeisen@intracen.org



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