Economic competitiveness of SIDS critical for sustainable development

Building the economic competitiveness of small island developing states (SIDS) will help in enhancing sustainable development and growth, said the Deputy Executive Director of the International Trade Centre (ITC), Dorothy Tembo.

In her address to the High-Level Roundtable on the United Nations International Year of Small Island Developing States (SIDS), held in Geneva on 20 June 2014, the Deputy Executive Director said ITC works to support small and medium-sized enterprises (SMEs) to enter value chains and internationalise, and to use trade as a tool for poverty eradication and development. Ms Tembo said trade expansion is closely linked to private sector development.

‘Entrepreneurship is a means to foster inclusive and sustained economic growth and employment,’ said Ms Tembo. ‘The largest untapped source of growth is that of small and medium-sized enterprises. Existing SMEs account for 80 per cent of jobs. In SIDS, building the supply side capacity and supporting the growth and competitiveness of SMEs are necessary anchors for development. Without jobs, the achievements in health, education, peace and security will not be sustainable.’

Ms Tembo stated that more than 60 per cent of ITC’s resources are focused on least developed countries, landlocked developing countries and SIDS. She noted the possibility of a growth in demand for ITC’s resources and technical assistance in trade in line with the increasing needs of countries around the world to improve their trade capacity and to access markets.

‘For SIDS, given their limited domestic market, the companies and SMEs have to focus on harnessing regional and global demand for their products and services. This is where ITC’s work on building competitiveness and helping SMEs to internationalise will play a major role.’

Ms Tembo pointed out that SIDS in the Caribbean face a quandary. With high per capita income, they are often unable to access international resources in grant form or on concessional terms. But many of these countries have pockets of poverty, escalating debt situations and flagging industries. This is coupled with their vulnerabilities to exogenous economic shocks and climate change. She stressed the need to address the vulnerability of SIDS in Aid for Trade initiatives. Ms Tembo pointed out that businesses in SIDS face a serious challenge in enhancing their competitiveness due to high transaction costs in moving goods across borders. As such, effective trade facilitation is critical as an engine for boosting SME competitiveness. She said ITC is collaborating with other UN agencies to boost the tourism development potential for the poorest and most disadvantaged communities.