How Strategic Are Trade Strategies? Trends for Effective Development



Alberto Amugo Pacheco and Marion Jansen | International Trade Centre

Executive summary:

Over the past decade, there has been a worldwide explosion in the number of strategic policy documents dealing with trade and development. The result has often been a confusing scenario of overlapping plans, initiatives and strategies. In an ongoing effort to help policymakers, businesses and researchers to navigate through the complexity of these initiatives, ITC developed the Trade Strategy Map, a repository of nearly 1,500 documents from 169 countries that focus on trade and development. These strategies are used as both tools for strategic policy planning and as legitimate policy instruments.

The database, covering the years 2001–2017, is the first systematic effort of such scale to identify, classify and make such documents easily available to the public. It is part of ITC’s contribution to the global policy debate on trade and development strategies. The database is a useful tool for policymaking and analysis; it is also a platform to increase transparency and provide visibility to existing policy initiatives in developing countries.

This paper is the result of a three-year analysis of the 1,454 trade strategies in the database. The patterns that emerge include a relative decline in the mainstreaming of trade in development policies and a trend for international organizations to place increasing emphasis on inclusiveness and sustainability issues. These findings are highly relevant for trade strategy policymaking and should be factored into new trade strategy initiatives.

Key trends:

Trade strategy policy is on the rise. Over the past decade, there has been an explosion in the number of country initiatives dealing with strategic trade and development issues. In 2015, the number of active documents reached 729, a five-fold increase since 2004. Analysis of data reveals that traditionally there were more nationally grown strategies than strategies developed by international organizations, or with their support. Since 2013, however, international initiatives have been gaining weight.

This suggests that national policymakers are increasingly seeking external assistance from specialized agencies that can provide policy advice to support the development of effective export development blueprints.

Where are the regional strategies? While more than 40% of existing trade strategies identify trade integration and regionalism as crucial policy areas, less than 3% of the strategies are regional. Regional strategies tend to focus more on services and core trade topics, such as trade facilitation, quality issues and international standards, or trade information.

This suggests that policymakers prefer dealing with these topics at the regional level. The international trade community – regional economic communities in particular – should make it a priority to develop more regional trade strategies. Regional trade agreements also provide an adequate context to develop regional strategies that can pave the road for further trade integration.

An opportunity for diversification. Trade strategies tend to focus on a very narrow range of mostly agricultural products, perpetuating existing trade relationships between developed and developing countries. Agriculture accounts for almost a third of the sectors covered. Vegetable products, animal products, textiles, clothing, food, as well as wood products, are the most popular non-services sectors.

Strategies have begun to place a strong emphasis on modern services sectors. Policymakers should place economic diversification at the centre of every trade strategy and take the opportunity to expand the range of sectors that trade strategies typically prioritize. High value-added sectors with the potential to bring about economic transformation should feature prominently in trade strategies. Sector-specific analysis indicates that more than half of the sectors in the database are services, with business, educational and tourism services being the most frequently prioritized sectors.

Trade strategies increasingly deal with a large variety of sustainability issues. Sustainability and inclusiveness dominate the trade and development policy agenda. Poverty reduction, the protection of the environment, gender and youth issues, as well as vocational training are among the most widely cited topics in trade strategies. Trade finance, regionalism and trade promotion are the most cited core trade topics. Although sustainability topics dominate the agenda, there are key differences between domestic initiatives – more likely to deal with trade topics – and international ones, which focus more on sustainable development. There are also differences within international initiatives, with those involving least developed countries much more likely to focus on trade issues. Regional strategies also place more emphasis on core trade topics than on sustainability or inclusiveness.

The analysis suggests that the benefits of dealing with sustainability and inclusiveness issues in the context of trade strategies are widely recognized. The analysis also indicates, however, that national policymakers in developing countries have appetite for more core trade issues in trade strategies.

Mainstreaming trade issues into national development plans is falling. The share of documents mainstreaming trade over the total number of documents in the database has fallen from 30% in 2005 to 22% in 2015. International development initiatives mainstreaming trade have declined from 45% to 22%; for domestic initiatives, the figure has increased slightly to 21% from 18%.

Mainstreaming trade is widely recognized as an important area. The United Nations 2030 Agenda for Sustainable Development identifies trade as one of the horizontal issues that can help achieve the Sustainable Development Goals. For whatever reason, the fall in the share of international initiatives focusing on trade has coincided since the launch of the Aid for Trade initiative in 2005, which set mainstreaming of trade as one of its major goals.

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This paper was originally posted here.