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    Network, What Network?

     

     
     
    © International Trade Centre, International Trade Forum - Issue 1/2002

    Does your trade support network help promote your export strategy? For many countries, the question follows on from another issue: why have a trade support strategy at all? Very few developed countries have a national strategy for trade support or export promotion, so why should developing countries? Indeed, at the 2001 Executive Forum, one veteran of trade support institutions asked bluntly whether any developed or developing country had a strategy that worked. "I don't think you'll find many," he suggested.

    He is right. Few countries have what could be considered a national export strategy. Fewer actually implement the strategy and of those that do, very few have had a discernible impact on export performance. So why does ITC continue to promote the idea that developing countries should have a national export strategy?

    Our answer is straightforward. When the resources available for trade-related support are extremely limited, which is generally the case in developing countries, steps must be taken to ensure that these resources consistently target priorities. This is what effective trade promotion is all about. A strategy provides the necessary guidelines in terms of what resources are needed, for what purposes, to be used by whom and how.

    If there is no strategy

    In the absence of strategy, priorities are not defined and the issues, opportunities and constraints upon which resources should focus are not determined. In the absence of strategy, there is no shared vision between the public sector, which in developing countries is the principal, if not exclusive, source of trade support services and the private sector, the user of such services. In the absence of strategy, there is no coordination among trade support institutions. Without strategy, resources, both financial and human, are expended, but not directed. And no developing country can afford that.

    The case for a developing country to have a national export strategy is particularly strong given the role of the public sector in export development and trade promotion. In developed countries, a "market" for trade support services exists. Firms interested in exporting can acquire the commercial information, purchase the training and access the financing needed to "go international". These services are available from the local marketplace. Not so in most developing countries. While the need for such services is as great, effective demand is not sufficient to generate a supply response within the market. It is the public sector that must step in to fill the void at least until such time as sufficient demand for export support services has been created to lead to the emergence of private sector service suppliers.

    Make the strategy relevant and realistic

    This leads us to the topic selected for debate at the 2001 Executive Forum: Is Your Trade Support Network Working? The first challenge confronting the developing country strategy-maker is to design a relevant and realistic strategy. The next challenge is to ensure that it is effectively implemented. In Montreux last September the Executive Forum participants looked at this second challenge from two points of view: the enterprise manager's and the national strategy-maker's. For a national export strategy to be effective, the answer to the question, "Is my trade support network working?", must be yes.

    The enterprise manager is looking for information, advice and probably financing that will lead to early and sustained success in the international market place. If the national trade support network can deliver these, at low cost, he's happy: the trade support network is working. For the export strategy-maker, the question is a bit more complex. Certainly the trade support network is working if the enterprise manager is happy. But that is only part of the answer. For the export strategy-maker must also be sure that the network is responding to other client groups and issues. The strategy-maker must ensure that the network is addressing the longer-term issues of national competitiveness - promoting new entrants into the export community, stimulating international entrepreneurship, developing new export industries and increasing national "value-addition".

    Address longer-term issues

    The strategy-maker must also be certain that the trade support network is responding to the development dimension of national export strategy, which includes export-led poverty reduction, employment generation, and equitable regional development. The strategy-maker must ensure that the network includes decision-makers in other economic and social ministries and that the export and international competitiveness objectives are fully reflected in their plans and programmes. Only then can the strategy-maker confidently declare that the trade support network is working.

    During the Montreux debate it became clear that while the "border-in" issues of export capacity and competency development, lower transaction costs and value-addition were recognized as important, trade support networks and, indeed, decision-makers in Departments of Trade continue to focus on the "border-out" issues of market access and market promotion. Best practice suggests that the national trade support network must focus on both.

    Overcoming resource shortages

    This is easy to say, but difficult to achieve. At the best of times, the resources available to most trade support institutions in the national network are barely adequate to meet a single focus, let alone a dual border-in/border-out focus. Options were discussed at length at last year's Executive Forum. Charging for services, based on a sliding scale depending on the type of client, is one possibility (the New Zealand approach). Providing cost-free services to members who pay membership fees based on their size is another (the Saskatchewan trade and export partnership). Generating revenue from exhibition facilities is another (the Indian trade promotion organization).

    Irrespective of the source and level of income-generation, it was agreed in Montreux that a national trade support network cannot be expected to sustain itself on self-generated funds. Support through the national budget is a prerequisite. Two variations to this rule received particular attention. CORPEI is Ecuador's private sector, non-profit trade promotion and investment organization. Under the law creating it, CORPEI received a repayable contribution to finance the organization and its promotion effort, financed from levies on petroleum exports, other exports and imports. The contribution has to be repaid in US dollars after ten years at zero interest. To ensure repayment CORPEI invested more than one-third of its income in a fixed-term fund. Mexico's Bancomext finances all its trade support programmes through income generated by its trade financing activities, an accomplishment that raised the question why more countries don't organize their national trade support organization along similar lines.

    Monitoring and evaluation

    As one participant concluded, no size fits all, either in the configuration of the national trade support network, the nature of its services, or the way it is financed. However, it was agreed that it is not possible to confirm the network is in fact working towards the objectives of the enterprise manager and the national strategy-maker without close monitoring and objective evaluation. This is where additional work should be directed.

    Brian Barclay is Coordinator of the ITC Executive Forum on National Export Strategies. Contact: barclay@intracen.org