Trading up – how developing countries can benefit from global trade
Dr Tony Heron, of the Department of Politics, is engaged in a research project which could help governments better understand how to help developing countries participate in, and benefit from, world trade.
Thanks to the Oxfam ad campaign of several years ago, most of us are familiar with the proverb "Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime". Taking this principle, developed countries such as the UK are beginning to shift the focus of their aid giving away from tax breaks and preferential trade quotas for developing countries, in favour of equipping them with the skills and infrastructure to diversify and become self-sufficient in global markets.
In the last twenty to thirty years there has taken place a growing liberalisation of trade. As a consequence, developing countries have had to adapt to a more global outlook. However, many smaller developing countries have experienced stumbling blocks to participating in world trade due to population and physical constraints, in terms of resources, people, skills or technical capacity, which prevent them from diversifying their activities.
Dr Heron explains: "In the past, developing countries benefitted from unilateral aid, non-reciprocal tariffs and quota preferences. In simple terms, this involved tax breaks, reduced import tariffs and other measures to enable developing countries to compete on a level playing field when it came to world trade. However, despite these measures, smaller developing countries have often failed to take full advantage due partly to their size and relative lack of skills, know-how and technical capacity. Also, international trade is a very complex and technical area, involving strict standards and compliance laws which, very often, developing countries do not have the expertise and know-how to meet".
In place of preferential taxes, tariffs and quotas, developed countries are now moving towards a system of giving aid for capacity building, enabling developing countries to gain technical personnel and better infrastructures. Dr Heron is examining how this new model of aid for capacity building is affecting different countries, in order to understand how local political, social, cultural and economic conditions might be acting as a roadblock to trade reform.
Dr Heron has focused on six case study countries: Jamaica, Belize, Swaziland, Lesotho, Fiji and Mauritius. For each country he is looking at why the 'old' model of tariff and quota preferences is no longer providing developing countries with the help they require, what the potential impacts of this situation might be, and to what extent the 'new' model of aid for capacity building is addressing this problem.
Dr Heron again: "Much of the aid given by developed countries to poorer nations comes with conditions but in the past rarely has this had the desired effect. In order for developing countries to start benefitting from world trade, the political conditions of aid need to be rethought. The internal conditions which may be preventing poorer nations from developing, for example political resistance to change, must also be addressed".
It is anticipated that the research will make a major contribution to the international political economy and development studies literatures, while generating policy-relevant empirical findings that will be of interest to a range of stakeholders, including bilateral and multilateral aid donors, think tanks and NGOs.
For further information, please contact Dr Tony Heron at:
email : t.heron@sheffield.ac.uk
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