Trends and Challenges

It is widely acknowledged that trade is a strong growth engine. Yet, for trade liberalization to have a positive impact on development and on poverty reduction a strong supply response to reform efforts is needed.

Historical evidence shows that manufactured exports often stimulate faster growth than other types of export. So it appears that what form trade takes does matter.

There have been two major shifts in the pattern of world trade in recent years. The first is the dramatic growth in manufacturing exports from some developing countries accompanied by substantial reduction in their poverty rates. The second is the shift from trade in products to trade in 'tasks' as the production process becomes more fragmented into stages. As a result, ability to access international value chains relies increasingly on appropriate specialization and capacity to deliver competitive goods in terms of price, quality, time and quantity. The standards and regulations applied in developed country markets must also be met and conformity with product standards and technical regulations must be demonstrated.

Taking advantage of opportunities provided by trade liberalization and global markets means both increased investment at enterprise level and public support in improving productivity and technology extension services, training, export consortia and cluster development. Increased supply capacity is necessary - but not sufficient - for gaining entry into world markets. Proving conformity with standards and technical regulations requires establishing efficient testing, certification and accreditation mechanisms that conform to the requirements of the Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT) Agreements and enjoy international recognition. These facilities are thus of utmost importance for developing countries wanting to benefit from trade opportunities.