Market-driven growth can enhance Commonwealth prosperity
The diversity of the Commonwealth cannot provide the basis for a shared sense of prosperity despite a common language and legal system, said the Acting Deputy Executive Director of the International Trade Centre (ITC) Ashish Shah. Addressing delegates at the Wilton Park conference on the Commonwealth on 31 March 2014, Mr Shah stated that market-driven growth can drive prosperity in the 53-member Commonwealth.
‘Any debate on prosperity has to begin with economic prosperity as the foundation for wider prosperity,’ said Mr Shah. ‘Competitiveness and partnerships make for the best kind of prosperity – both sustainable and sustained prosperity. Conditions for co-operation are complex today with highly elaborated value and supply chains divided and organized across all geographies making the world a much smaller place.
Economies and markets throughout the world have become hugely interdependent and global, with entrepreneurship, enterprise, technology and knowledge as specific and fundamental factors of production. Prosperity is inherently linked to the ability of countries to make the best of this inter-connectedness and to ensure that they find their right place in this highly complex and sophisticated world of international trade,’ he added.
Mr Shah stressed the importance of global competitiveness in fostering prosperity, saying that small and medium-sized enterprises (SMEs) which form the backbone of economies in developing and developed countries can contribute to growth.
‘Increasing the participation of SMEs in global value chains and upgrading the value SMEs add along the global value chains can promote best development outcomes in prosperity through international trade. The best recipe for prosperity is to invest in building the competitiveness of SMEs.’
Mr Shah said that in the past 20 years, countries which have managed to grow the linkage of SMEs in global value chains and increased value-added exports have experienced higher GDP per capita growth of 3.4 per cent on average, compared to 2.2 per cent for countries which only increased their participation in global value chains without upgrading their domestic value addition. He said Commonwealth countries can benefit by deepening trade integration through SME promotion to facilitate intra-Commonwealth trade.
‘The recent World Trade Organisation Bali Agreement on trade facilitation offers the legal basis for Commonwealth countries to secure technical assistance in trade facilitation,’ said Mr Shah. ‘Some of the emerging economies, for example, India, can contribute to trade facilitation expertise and for the more developed Commonwealth countries can provide financial and technical support to the least developed countries (LDCs) and the low income developing countries.’
He said Commonwealth countries can collaborate on a recently launched ITC project supported by the UK Department for International Development to unleash the potential of untapped trade between India and East Africa. The project, Supporting India’s Trade Preferences for Africa (SITA), will run from until 2020. The six-year project is aimed at promoting exports from five East African countries – Ethiopia, Kenya, Rwanda, the United Republic of Tanzania and Uganda – to India by boosting economic co-operation and trade among SMEs.
Mr Shah noted that a recent ITC study conducted in collaboration with the Commonwealth Secretariat has revealed that many of its developing member countries have economies which are heavily concentrated on a limited number of products and markets. Meanwhile, Commonwealth LDCs remain highly dependent on commodity exports which make them vulnerable to price volatility. They do not enjoy any preferential tariffs for global exports. He said intra-Commonwealth trade has remained stagnant at between 16-18 per cent annually, but with tariff reductions, this could lead to increased trade, particularly in the agricultural sector. There is potential for growth in the services sector and closer economic co-operation on trade facilitation can boost intra-Commonwealth growth and prosperity.
‘’We need to ensure through effective government policies that the benefits of economic prosperity are shared equitably to bring about broad-based prosperity for all,’ said Mr Shah.