THE FUTURE OF TRADE IN DEVELOPING COUNTRIES

THE FUTURE OF TRADE IN DEVELOPING COUNTRIES

In the growing world economy, the Northern Hemisphere can no longer rely solely on trade led by Fortune 500 corporations. Trade must also increase in the Southern Hemisphere for the benefits of globalization to continue.

Developing countries are strategically important to fostering an integrated global economic framework. Firms exporting to developing countries will expand into new markets, reaching consumers with increasing purchasing power. Firms importing from developing countries will gain access to high-quality, lower-cost products that improve their competitive edge.How is one to help developing countries while letting market forces prevail? Here we identify issues based on research conducted at Georgetown's McDonough School of Business. We then outline the market-oriented steps taken by the International Trade Center in Geneva.

The key issues are globalization, new forms of partnership and information technology.

Concerning globalization: Worldwide manufacturing and sourcing strategies have made the production of goods cheaper, faster and better. To compete, producers must be able to measure their competitiveness and correct weaknesses. This requires market information, an ability to understand and forecast demand, and creative product adaptation and market niching.

These requirements are three strikes against developing countries: They have serious limitations in research and development, great difficulty in accessing trade information and often lack sophisticated marketing skills. Creativity and new technologies present these countries with opportunities for catching up with the industrialized world.

To become competitive, firms in developing countries must be able to measure and evaluate their performance. The International Trade Center has therefore developed a ''competitiveness gauge'' that enables firms to compare themselves to baseline data from manufacturers around the world. Producers anywhere can compare their production, organization and practices with those of enterprises in the same sector and know where to improve their performance. This tool also enables manufacturers to adapt their products to the quality expectations of their customers.

As for teamwork between government and business, it will become imperative as developing countries foray more deeply into the global economy. Firms and governments must bury their mistrust and communicate constructively on strategies and collaboration. Firms also must share costs and lessons learned.

An emerging trend in the industrialized world is the sharing among firms of such assets as buildings, employees, telecommunications systems, transport facilities and the joint marketing of complementary products. Developing countries have to find their own models for such alliances.

The trade center has pioneered tools for exporters that address criteria for successful cooperation between the public and private sectors. These tools are kept 80 percent the same while 20 percent is customized to local needs. The Executive Forum on National Export Strategies scheduled by the trade center for September will review the success of partnership-based export-development strategies.

In information technology, lack of a telecommunications infrastructure is no longer a permanent handicap. The investment required to establish a basic national telecommunications system has fallen drastically, allowing private firms to bring telecommunications to a country within two years. The question therefore is not if, but when, developing countries will participate in e-commerce.

The International Trade Center serves as these countries' one-stop shop for guidance on implementing e-commerce strategies. It trains government officials, firms and trade support institutions. It advises on cyber marketing, international purchasing, and the legal, financial, quality and logistical aspects of e-commerce for manufactured goods as well as services.

Responding to needs identified through research, the trade center offers programs matching exporters with importers, profiles port strategies for services, sponsors online exhibitions of products from developing countries, and answers the most frequently asked questions on e-commerce.

The implementation of the World Trade Organization multilateral agreements has brought about unprecedented growth in international trade. Helping developing countries to capitalize on it is essential. They must be assisted in practical ways to catch up with the industrialized world.

Trade with firms in these countries will lower production costs and the costs of importing and expand market access. Without the support of trade, the chances for continued development and stability will be in jeopardy for both the Northern and Southern hemispheres.