Transcript The nature of the trade-growth-poverty relationship in LDCs, Michael

UNITED NATIONS
CONFERENCE ON TRADE AND
DEVELOPMENT (UNCTAD)
CONFÉRENCE DES NATIONS
UNIES SUR LE COMMERCE ET LE
DÉVELOPPEMENT (CNUCED)
The Nature of the Trade-Poverty Relationship in
Least Developed Countries
(Based on LDC Report 2002, 2004 and 2006)
Michael Herrmann
Division for Africa, LDCs and Special Programmes
UNCTAD, Geneva, Switzerland
The LDCs
This presentation
• Introduction
• Nature of the Trade-Poverty Relationship
– Trade integration (level and form)
– Trade liberalization (import restrictions)
– Trade specialization (export structure)
• Reasons for Weak Trade-Poverty Relationship
– Reasons for weak export response to trade liberalization
– Reasons for weak poverty-reduction response to exports
• Policy implications
– Issues
– Challenges
– Responses
Introduction
• Principle assertions in debate
– Economic growth is good for poverty reduction.
– Trade liberalization is good for growth and poverty reduction
• Key findings of our LDC-related research
– Economic growth is necessary, but not always sufficient for
poverty reduction
– It’s not just trade liberalization, but trade specialization that
matters.
Introduction
Chart 9. $1/day and $2/day poverty curves
100
80
60
40
B
A
20
0
100
400
700
1000
1300
1600
1900
Annual average private onsumption
c
per capita (1985 PPP $)
$1-a-day
Source: UNCTAD, The Least Developed Countries Report 2004.
$2-a-day
2200
Nature of Trade-Poverty Relationship
Trade integration
T ABLE 3. L EVEL OF TRADE INTEGRATION OF LDC S AND OTHER COUNTRY GROUPS ,
1980–1983, 1990–1993 AND 2000–2003
(Percentage of GDP)
1980–1983
1990–1993
2000–2003
A. Total trade (B+C)
35.7
37.0
52.3
B. Exports of goods and services
11.9
13.5
22.1
C. Imports of goods and services
23.8
23.5
30.2
-11.9
-10.0
-8.1
24.6
31.7
43.4
B. Exports of goods and services
9.7
14.3
20.7
C. Imports of goods and services
14.9
17.3
22.7
D. Trade balance (B-C)
-5.1
-3.0
-2.0
A. Total trade (B+C)
33.4
43.7
58.4
B. Exports of goods and services
16.4
21.6
30.1
C. Imports of goods and services
17.0
22.1
28.3
D. Trade balance (B-C)
-0.5
-0.5
1.8
A. Total trade (B+C)
36.0
34.2
43.5
B. Exports of goods and services
17.6
17.1
21.4
C. Imports of goods and services
18.4
17.1
22.0
D. Trade balance (B-C)
-0.8
0.0
-0.6
LDCs
D. Trade balance (B-C)
Low-income countries
A. Total trade (B+C)
Low and middle income countries
High-income OECD countries
Nature of Trade-Poverty Relationship:
Trade integration
Chart 15. Net trade in goods and services for different country groups, 1980-2001
(As percentage of GDP)
4
2
0
-2
-4
-6
-8
-10
-12
1980
1982
1984
1986
Least developed countries
1988
1990
1992
1994
Other developing countries
1996
1998
2000
Developed countries
Nature of Trade-Poverty Relationship
Trade Liberalization: Extent of
Nature of Trade-Poverty Relationship
Trade Liberalization: Effects of
Trade liberalization and trends in real exports and private consum
per capita
in LDCs,
1990-1995 and
1995-2000
Nature
of Trade-Poverty
Relationship
ion and trends(Average
in real exports
and private
consumption
annual
growth
rate,
percentage)
Trade
Liberalization: Effects of
a in LDCs, 1990-1995
and 1995-2000
erageChanges
annual growth
percentage)
in realrate,
exports
and private consumption per capita in LDCs with
different degrees of trade liberalization, 1990-1995 and 1995-2000
1995–2000
1990–1995
(Average annual growth
rate,
per
cent)
10
9.4
1995–2000
7.0
9
10
7.0
5.1 9
8
7
6
5
4
3
-0.6
2
-2.3
1
0
Moderate
Restrictive
4.7
-0.6
0.1
Restrictive
Open
8
7
6
5
4
3
2
1
0.8
0
9.4
7.6
4.7
0.8
0.4
0.
Moderate
Moderate Open Restrictive
Re
0.1
Private consumption per
capitaconsumption
Exports
Private
per capita Exports
untries Report 2004.
Nature of Trade-Poverty Relationship
Trade specialization: Extent of
Nature of Trade-Poverty Relationship:
Trade specialization: Extent of
Nature of Trade-Poverty Relationship:
Trade specialization, Extent of
Summary table: Composition of merchandise exports in LDC subgroups classified by export
specialization, 1980-1983 and 2000-2003
(Percentage of total merchandise exports)
Labour- and resourceintensive manufactures
Primary commodities
1980-1983
Agricultural exporters
Mineral exporters
Oil exporters
Manufactures
exporters
Services exporters
2000-2003
1980-1983
Low-, medium- and hightech manufactures
2000-2003
1980-1983
2000-2003
94
90
4
6
2
5
94
86
2
4
4
9
98
99
1
0
1
1
63
24
32
73
5
3
91
64
4
31
5
5
5
3
12
19
Mixed manufactures/
83
78
services exporters
Note: Shares do not add-up to 100 because of rounding.
Nature of Trade-Poverty Relationship
Trade specialization: Effects of
Shares of LDC sub-groups in world exports of good and services, 1980-2002
Nature of Trade-Poverty Relationship
Trade specialization, Effects of
Nature of Trade-Poverty Relationship
Trends
Trade specialization, Effects of
00
50
100
50
Nature of Trade-Poverty
Relationship
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Ambiguous 1980
effects
0
Benin
00
400
80
350
60
Burundi
300
40
250
20
00
200
80
150
60
100
40
50
20
0
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
40
Rwanda
180
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Maldives
160
20
140
00
120
80
100
60
80
60
40
40
20
0
20
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Private consumption per capita
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Exports of goods and services
Reasons for Weak Trade-Poverty Relationship
A. Reasons for weak export response to trade liberalization
National level
International level
Dependence on primary (non-fuel) commodities
Commodity price decline and instability
Weakness of productive and supply capacities
Weakness of entrepreneurial class
Market access restrictions by trading partners
Weakness of business support institutions
Phasing-out of Agreement on Textiles and Clothing
Underdevelopment of infrastructures
Changing composition of aid
Agricultural support of advanced countries
B. Reasons for weak poverty reduction response to increasing exports
National level
Weak linkages between sectors
Competing uses of revenues
Bad use of revenues
High rate of population growth
Effects of civil conflict
International level
High rate of capital flight
High rate of debt service obligations
Reasons for Weak Trade-Poverty Relationship
Summary table: Share of exports of LDCs and ODCs affected by
adverse trade conditions, average 1999-2001
(percentage)
Tariff barriers of developed
countries
Environment-related trade
barriers
Agricultural support measures by
advanced countries
Commodity price decline in world
markets
Phasing-out of Agreement on
Textile and Clothing
Challenges associated with
extractive industries
Least
developed
countries
(LDCs)
Other
developing
countries
(ODCs)
24
38
41
20
11
4
28
15
24
13
38
20
Policy implications:
Issues
Issues in trade and poverty
Export/import
instability &
food security
Trade and
employment
Balance-of-payments
constraint & poverty
Upgrading
and exclusion
Gender relations
and export
development
“Curse” of
primary commodity
dependence
Trade and Poverty
Trade, poverty
and conflict
Trade liberalization
and poverty
Bargaining power
in global
production chains
Terms of trade
and poverty
Exchange rate
and poverty
Trade and wage
inequality
Policy Implications:
Challenges
Summary table: Forgone export revenues of LDCs in 2001…
(USD million)
Cocoa
Coffee
Cotton
Copper
All non-oil primary commodities
All exports of goods and services
…Due to changes of LDC
…Due to changes of
shares in world exports of commodity prices in world
goods and services against markets against 1980 base
1980 base year
year
293
55
765
70
2975
386
-25
103
5508
1169
20800
n.a.
USD 20.8 billion in forgone export revenues is about equal to
153 % of net ODA disbursements to LDCs in 2001
11% of the GDP of the LDCs in 2001
Policy Implications:
Challenges
Chart 3: The structure of merchandise imports of LDCs and other developing countries, 1999-2001
B: Imports for basic consumption goods
as share of total merchandise imports
A: Imports for capital goods
as share of total merchandise imports
45
41.7
25
35
30
25.4
25
24.3
20
13.3
15
9.8
10
5
3.7
% merchandise imports
% merchandise imports
40
19.2
20
13.7
15
10
5
7.0
4.4
2.4
1.2
0
0
Office and telecom
machinery
Industrial machinery
All machinery
Medicine
Basic foodstuff
Least developed countries
All foods
Other developing countries
Policy Implications:
Responses
The relationship between trade, the development of productive capacities,
employment and poverty
Trade
• Exports
Development of
productive capacities
• Imports
• Capital accumulation
(physical, human, social,
organizational)
Poverty and well-being
• Income / consumption
• Human development
Employment
• Structural change
• Technological progress
• Food security
Direct links between trade and poverty
Development links between trade and poverty