Trade Policy Note Final-rev08 - Development

IV.
EXPORTS AND POVERTY
Can developing countries “export their way out of poverty”, can they export their way
to achievement of the MDGs? How can the poor in developing countries achieve
productivity and the means to compete in the world market? How can governments
ensure that the benefits of exports are w idely shared and that they reduce inequalities?
How can it be assured that export industries are sustainable, that adequate working
conditions are maintained, that environmental impacts do not undermine the
livelihoods of people in other sectors. What are the constraints faced by governments
in promoting exports? What contribution can “aid for trade” programmes make to
addressing “supply side” constraints which inhibit a country’s ability to export?
Export Growth and the MDGs
Increased exports of goods and services can provide increased incomes for poor
people, government revenue, new opportunities for employment, including high paid
jobs abroad, particularly for women and young jobseekers. Exports can contribute to
the achievement of MDGs by lifting people out of poverty (MDG1) and empowering
women (MDG3), and by contributing to the achievement of MDG8. MDG8 aims at a
trading system in which developing countries can extract greater benefits from the
international trading system.
Trade policies should be aime d at enabling poorer people to compete in the world
market and derive benefits from globalization. The simple orthodoxy would suggest
that trade liberalization will allow resources to be redeployed from low productivity
to high productivity export sectors. However, it ignores the basic fact that there are
already high levels of unemployment in developing countries. Human resources are
available for the export sector, they do not have to be “liberated” by creating
unemployment in other sectors. 31 Import and e xport policy should be twin elements of
an overall industrialization strategy, targeting the import of essential food, fuels, raw
materials, inputs, capital equipment, machinery, spare parts and intermediate inputs
goods, supporting export growth and earning the foreign exchange necessary to
finance such imports. Priority should be given to the expansion of those export
sectors that will provide opportunities for achieving the MDGs and other
development goals.
One problem is that many poorer developing countries have suffered a decline in their
share in world exports, even when benefiting from tariff preferences which they now
find eroding. Other countries have been able to rapidly increase exports in response to
certain trade policy measures which have wor ked in their favour, but are finding
themselves unable to compete when faced with a more open, competitive situation.
One example is textiles and clothing, where many poorer countries have developed a
successful export industry within the framework of the discriminatory structure of the
Multi Fibre Agreement (MFA) and are now faced with the challenge of a more
competitive environment as described in Annex A to this Section. Another example is
the sugar sector where the erosion of EU preferences will cause inevitable adjustment
costs to poor producers.
31 See Stiglitz, Joseph and Andrew Charlton, op. cit., p. 25-26.
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