Prosperous countries in the North, such as the United States, can no longer rely on trade between developed countries led by Fortune 500 corporations alone. Trade must increase in developing countries and transitional economies if all are to benefit from a growing world economy. Policymakers and businesses of all sizes must realize the strategic importance of the developing countries of the South, not just from the traditional sociopolitical perspective, but from the perspective of fostering an integrated global economic framework. It is in everyone’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 and reach consumers who are experiencing significant gains in purchasing power, and companies that import from developed countries will gain access to a supply of high-quality but cheaper products produced in conformance with international standards. This not only increases sales, but significantly improves these companies’ 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 Center in Geneva, this article identifies those issues in international trade that will affect developing countries, outlines some initial steps taken by the 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 outsourcing strategies have made the production of goods cheaper, faster and better. To compete, producers must be able to measure levels of competitiveness and to correct weaknesses. Doing this requires market information, an ability to understand and forecast demand, and creativity in adapting products and finding a market niche. These requirements constitute three strikes against developing countries, who face serious limitations in undertaking the needed research and development, locating scarce trade information and utilizing more sophisticated marketing skills. Creativity and new technologies, on the other hand, present unique opportunities for the developing world to catch up with industrialized countries. 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 have the capacity to measure and evaluate their overall global competitiveness. In response, the ITC has developed a “competitiveness gauge,” that allows firms in developing countries to compare critical data with baseline data supplied from manufacturers around the world. Producers in any country can now compare their production, organization and other practices with those of other enterprises in the industry sector, and can therefore benchmark and improve their corporate performance.
* Partnerships. As developing countries foray farther into the global economy, intense teamwork between business and government and among business people themselves has become imperative. Firms and governments have to bury their mutual mistrust and foster constructive dialogue on strategies and effective 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 infrastructure, buildings, employees, storage, transport, repairs, telecommunications systems and, in some instances, marketing costs, through dual or cross-promotion of complementary products. Developing countries have to find their own models for such joint ventures, value-added partnerships, strategic coalitions and alliances, and cooperative agreements. These are the ways of the future where risks are shared and partnerships rule the day.
The ITC has pioneered and developed a number of innovative tools and services especially for developing-country exporters using the product-network approach. It addresses key criteria for successful cooperation among the public and private sectors, as well as with not-for-profit organizations and agencies such as trade-promotion organizations and industry associations. Akin to Pareto’s 80:20 rule, these tools are kept 80 percent the same while 20 percent are customized to respond to local needs, thus achieving economy and customization in a partnership-based approach. The Executive Forum on National Export Strategies to be held by the ITC later this year will provide a unique opportunity to review success stories of partnership-based and export-led global-development strategies.
* Information technology. Countries without efficient telecommunications infrastructure were long seen as doomed and excluded from such benefits of electronic commerce 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, however, the investment required to establish a basic national telecommunications system has dropped sharply, allowing private firms to bring telecommunications to any country — and to do it within two years. The question is therefore 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, the ITC serves as their one-stop shop for guidance on the implementation of overall national and business e-commerce strategies. It provides specialized training for decision-makers in firms and trade-support institutions and for government officials. It also offers advice on cybermarketing, international purchasing and the legal, financial, quality and logistical aspects of e-commerce.
For both the services and product sectors, specialized services will be developed in response to needs identified through extensive research, identifying growth and use patterns and the benefits and limitations of e-commerce. In response, the ITC will provide technical assistance that focuses on e-based marketing, technological, infrastructural, strategic and legal issues. Examples are specialized programs that can match exporters and importers of fresh fruit and vegetables, profile successful service-export strategies, offer online exhibitions of products from developing countries and provide answers to the most commonly asked questions regarding e-commerce constraints.
As a result of the successful implementation of global trade agreements signed earlier this decade, international trade has reached an unprecedented volume as international growth rates in trade continue to outdistance domestic ones. Sweeping policy reforms dominated the international trade-policy debate in the early 1990s, but figuring out how to help developing countries capitalize on these staggering changes is more important today. These countries must be helped in practical ways to execute a quantum leap in terms of their economies, thus enabling them to catch up with industrialized countries.
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, telecommunications 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.
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