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    Redefining Trade Promotion: Messages for TPOs

     

     
     
    © International Trade Centre, International Trade Forum - Issue 4/2000

    Trade promotion organizations are re-examining their role in light of today's changing trade environment. At the third World Conference of Trade Promotion Organizations in Marrakech, Morocco (25-27 October 2000), J. Denis Bélisle, ITC's Executive Director, outlined five key challenges to re-orient trade promotion. The conclusions are based on the views of 50 government and business leaders who debated the issue during ITC's Executive Forum on national export strategies.

    Redefining trade promotion is a theme I firmly believe in and one in which my organization has invested substantial efforts.

    In the context of today's super-competitive world and the radical changes being brought about by the new information technologies, all of us at ITC are convinced of the prime importance of redefining trade promotion. However, we realize very well that alone there is only so much (or so little) we can do. A year ago, in order to measure the importance they attach to the subject, we invited 50 senior government officials, business leaders and specialists from trade promotion organizations, academia and international organizations to our first Executive Forum on National Export Strategies. They came to brainstorm the subject with us in Annecy, France. I would like to share the five most important conclusions of our Forum.

    Integrate export strategy in economic planning

    A national export strategy must be comprehensively integrated into the overall economic planning framework. It should not deal simply with offshore market development and promotion, but should encompass the longer-term onshore challenges of establishing a national competitiveness environment, creating an export culture, a national consensus and developing new export industries.

    Understand the client's mindset

    The strategy must redefine trade promotion. The strategy-maker must define the country's markets both onshore and offshore. Who within the business community is the client? What are their needs versus their demands? The strategy must promote clustering and networking. It must emphasize not just exporting but the internationalization of the firm: in other words, ensuring that the opportunities for the firm's growth are maximized in the foreign market, in the shortest possible time. This can be done through partnerships, joint ventures, subcontracting, licensing agreements, as well as traditional exporting.

    Create a competitive environment

    Countries must seek to develop and sustain a viable national competitiveness environment. This should include:

    • a stable, predictable macroeconomic environment for enterprise development: low budget deficits, tight inflation control and competitive real exchange rates;
    • an outward-oriented, market-friendly trade and industrial regime;
    • a proactive foreign investment strategy;
    • sustained investment in human capital at all levels;
    • comprehensive technology support for quality management, productivity improvement and technical services for small and medium-sized enterprises (SMEs);
    • access to industrial finance at competitive interest rates; and
    • an efficient and cost-competitive infrastructure for air and sea cargo, telecommunications, electricity and Internet access.

    Some will say that they have heard all of this before. Yet for many countries, both developing and developed, the need to provide a competitive environment remains a major challenge, requiring constant effort. Trade promotion in the absence of a competitive environment is pointless; global competitiveness is increasingly recognized as the key to prosperity at both national and firm levels in the quickly changing economic environment.

    Incorporate feedback

    Effective trade promotion strategies are based on a continuous process of design, implementation, monitoring and evalu-ation, feedback and refinement. This activity does not end with the design of the strategy. The strategy-maker must be involved in all phases of the strategic planning cycle.

    Again, one can say, "We know this!" Yet few trade support institutions engage in serious export strategy evaluation until there is a crisis of confidence. Then they seek, or are forced, to hurriedly assess the relevance of their strategies. Sometimes, it is already too late.

    Encourage public-private sector partnership

    All stakeholders in the export process - that is, representatives of both the public and private sectors - have to come together in a strategy management team.

    One of the lessons learned by successful exporting countries is that, while the public sector is the catalyst in the strategy development and management process, to be effective the strategy must be 'owned' by the private sector. Strategy design is therefore most effective when its development and refinement come from the bottom up, with industry representatives and managers working directly with public-

    sector officials in establishing priorities.

    A national strategy must be supported by a structure - encompassing both institutions and institutional and functional linkages - to provide leadership and concerted action. Although no single model will suit all countries, or a single country at all times, a general principle is that there must be a link between the three principal stakeholders in the national export development effort: government, the private sector and labour.

    There will be different sets of linkages at the three major stages of the export strategy process:

    • planning and consensus building;
    • implementation and efficiency building; and
    • performance monitoring and assessment.

    There needs to be a central coordinating or lead mechanism during each of these stages: for instance, a national export strategy council for the first stage and a trade promotion organization (TPO) for the second and third stages. The council may include: ministries of planning, finance, trade and agriculture, and the TPO; private-sector associations of manufacturers, exporters and others in the trade; and labour representatives. Also, it is recognized now that the TPO is just one of several trade support institutions that should be involved in this process.

    As noted in my first point, a national export strategy must be comprehensively integrated into the overall economic planning framework. Consequently, it impacts on, and is influenced by, most aspects of overall national development. The national export strategy process therefore involves a broad range of functional linkages. These include:

    • trade and industry;
    • trade and investment;
    • trade and education; and
    • trade and science and technology.

    The five conclusions are, I believe, the most important points to consider in the development of a national export strategy.

    E-trade: An opportunity for change

    On a different, but very much related, subject, I encourage you to visit the ITC web page on this year's Executive Forum, held in Montreux, Switzerland in September 2000. Eighty senior policy-makers, business leaders and experts from 24 mostly developing and transition economies gathered for the Forum. They were joined by nearly 600 other participants from 86 countries through an e-discussion on the Internet. Over three full days, they exchanged views on the developing world perspective for Export Development in the Digital Economy. This year's theme followed logically on that of last year and was selected for two reasons. The first is our conviction that the new information technology and its e-trade dimensions will have a profound impact on all economies, including those of the developing world. The second is the need for this impact to be positive on the export trade of developing countries and economies in transition. The nature of the digital economy is a key factor to be considered in preparing a national export strategy.

    Subjects discussed at the Executive Forum included: new commercial opportunities in the digital economy; coordination of an effective national response; promotion of e-trade competency within the business sector; and the role of trade support institutions. The debates during the Forum were intense and, at times, passionate. As was done for the Executive Forum 1999, a publication is being prepared, and ITC's magazine will highlight the results. Meanwhile, a summary of the main conclusions of the meeting and ample background material are available on the ITC web site: http://www.intracen.org/execforum

    J. Denis Bélisle is Executive Director, International Trade Centre.