Market-driven TPOs support outward-oriented trade and investment
policies in successful Asian economies.
Few current trade policy issues are as polarized as the debate
over the relevance of trade promotion organizations (TPOs) for
developing countries. Some ardent free traders see TPOs
(particularly those funded and controlled by the state) as
inefficient and costly bureaucratic structures that offer little
support to exporting by private firms. Instead, they advocate rapid
import liberalization and competitive exchange rates to stimulate
At the other extreme, old-style state interventionists argue
that private sector export activity will not occur without support
from the public sector TPOs. Interventionists thus equate expanding
TPOs with export success. Empirical evidence from dynamic Asian
economies is more useful than economic ideology to understanding
complex institutional issues like TPOs.
The rise of dynamic Asian economies from poverty to
super-exporters of computers and cars is widely hailed as one of
the remarkable development achievements of the 20th century. Past
explanations for Asia's success include outward-oriented trade and
investment policies, low inflation, world-class infrastructure and
ample cheap manpower.
With greater recognition today that good policies need good
institutions, the spotlight is on the pivotal role of TPOs and
other institutions in supporting the creation of business
competitiveness. TPOs in Asian newly industrialized economies have
been market-driven, consistently providing timely and high-quality
marketing assistance to firms (particularly small and medium-sized
enterprises) and reducing transaction costs of exporting. Among the
most reputed are the Hong Kong Trade Development Council,
International Enterprise Singapore (formerly the Singapore Trade
Development Board), the Korea Trade-Investment Promotion Agency and
the China External Trade Council (of Taiwan, Province of
Four features of the Asian market-driven TPOs mentioned above
are worth highlighting:
Private sector involvement. Asian TPOs
have generally had a strong private sector involvement in their
establishment and operation. This involvement usually includes a
chief executive officer from the private sector, senior managers
with private sector experience and a board dominated by
representatives from the private sector. Emulating the private
firms they seek to support, these TPOs have developed services
tailored to business needs as well as quick response times and
International presence. Asian TPOs
tend to focus on the key export markets targeted by national firms.
A major aspect of their external orientation is an extensive
network of overseas offices and close links with foreign buyers and
market trends. Timely market intelligence and strong business
contacts are vital for their effectiveness.
Qualified professional staff.
Recruitment in Asian TPOs is on a competitive basis with the
emphasis on recruiting top marketing, business management and
engineering graduates from good universities and providing them
with extensive on-the-job experience in trade promotion.
Competitive salaries, postings in international markets and
sponsored postgraduate training are used to retain and upgrade
Sufficient financial resources.
International marketing is expensive and Asian TPOs tend to be well
resourced (with budgets of between US$ 10 million and US$ 60
million) through a combination of direct budgetary support and
The experience of dynamic Asian exporters suggests that
market-oriented TPOs are an important ingredient, along with good
policies and other institutional support, in influencing business
competitiveness in a global world. Other developing countries can
draw useful lessons from Asian experiences in designing and
restructuring their TPOs.
Ganeshan Wignaraja is Senior Economist at the Asian
Development Bank, Manila. He was formerly Head of Competitiveness
and SME Strategy,Maxwell Stamp PLC.