Aid for trade – reducing the barriers and increasing the benefits

It is widely accepted that trade is an engine for economic growth and development, and as a result donors have long invested in trade-related infrastructure – roads, storage facilities, telecoms and energy generation and supply.

But bricks-and-mortar on their own have yet to end poverty anywhere. In fact large construction projects are often hotbeds for corruption – the American Society of Civil Engineers estimate that $340bn (£217bn) is lost to corruption in the construction industry worldwide every year.

Beyond physical infrastructure, aid for trade is intended to enable developing countries to acquire the economic tools they need to expand their trade, including developing their policy and regulatory environments.

But it seems with one hand donor countries give and with the other they take away. A review of the progress made to meet MDG target 8.A (to develop an open, rule-based, predictable, non-discriminatory trading and financial system) shows that “despite the pledges by G20 members to resist protectionist measures initiated as a result of the global financial crisis, only a small percentage of trade restrictions introduced since the end of 2008 have been eliminated. The protectionist measures taken so far have affected almost 3% of global trade.”

And as research by Inge Ropke and others argue, not all trading systems are created equal. The Danish academic’s assessment of the ‘free trade dogma’ found that “the trading system is not something inherently good, which should be defended in all cases. Especially, the developing countries’ benefits from trade have been very dubious.”

So beyond simply investing in the infrastructure to facilitate trade how can policymakers, and those they consult on trade development, ensure that investments deliver value for money and result in gains that are both sustainable and contribute to development outcomes?

Trade facilitation is supposed to achieve many things – from supporting governments to take measures to diversify the economy to supporting business associations and marginalised groups, and helping to improve technical and logistical facilities in ports and laboratories.

The Guardian


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