Posted on February 2, 2016 by
By Christy Sisko and David Fischer
Last year was a busy one for international trade and development actors. We observed major progress in the renewal of the African Growth and Opportunity Act, continued global ratification of the World Trade Organization Trade Facilitation Agreement, proposal of the Tripartite Free Trade Area in Africa, and announcement of the Trans-Pacific Partnership, all of which bring new attention to the interrelationship between global trade and sustainable development.
But are these trade liberalization agreements sufficient to address the bottlenecks and barriers that continue to constrain economic growth and poverty elimination in developing economies? Do these economies have the resources to implement what they are signing up for? And what is the role of development actors in mitigating the drawbacks of agreements they are supporting accession to? These are all important questions, as it is in everyone’s interest that these agreements should leverage the highest and most inclusive economic benefit, and not benefit some at the expense of others.
As we know, trade liberalization affects different economies and actors within those economies in different ways. Vocal critics of free trade argue that removing all barriers and other protectionist measures will devastate economies, incite dumping, put enterprises out of business, displace communities, and shut factories. And yes, without appropriate planning, that might happen.
One timely case of a country in need of assistance is that of Afghanistan, which was granted membership to the World Trade Organization on December 17, 2015, after many years of technical assistance and policy reform efforts. Optimists in the international community cite more favorable trading opportunities, investment climate and economic growth as benefits to WTO membership. However, due to several factors ranging from poor infrastructure, weak governance, and pervasive insecurity, media outlets including the New York Times and a recent study by the United Nations Economic and Social Commission for Asia and the Pacific cite several potential drawbacks to membership that may negatively impact government revenue, historically strategic sectors, and vulnerable smallholder farmers. The articles highlight lingering challenges and capacity constraints that will need to be addressed together by development actors, government institutions, and the private sector.
Many opportunities exist to prepare weak economies like Afghanistan for trade liberalization at the enabling environment level, sector level, enterprise level, and social level. For example:
- Supporting investment in regional value chains and promoting inter-regional trade can expose and unlock the comparative advantages of economies. It can also facilitate regional distribution of agricultural inputs for increased agricultural production and profitability. Working through regional industry associations, the USAID Regional Agricultural Trade Expansion Support (RATES) project established a market information system, harmonized regional trade policy, and laid the foundation for a structured trading system to engage in increase cross-border trade, access regional markets, and increase food security.
- Harmonizing regional policy through legal and regulatory reform can give domestic and international investors access to larger markets on a regional basis, supporting economies of scale and cost competitiveness. The USAID Southern Africa Trade Hub’s support for the regional Single Administrative Document reduced transport costs by introducing a single, standardized document for customs clearance throughout the region and supporting the establishment of a Free Trade Agreement in Southern Africa.
- Investing in technical and vocational education and training can help upgrade the skills of the labor force to meet the demands of the private sector. In Rwanda, decentralized vocational education and training programs, such as the Higa Ubeho project, are providing training in plumbing, electricity, cooking, welding, construction, masonry, automobile mechanics, and public works to supply needed skills to continue the country’s rapid economic growth.
- Building the capacity of institutions in investment promotion and export development can help implement needed enabling environment reforms and sensitize the private sector to barriers lifted and opportunities created. In the West Bank, the USAID Investment Climate Improvement (ICI) project simplified the tax payment structure and greatly streamlined the business registration process, making it easier and less risky for investors to start operations and for the government to collect revenue.
- Sector-based support for industries that have a comparative advantage will promote systemic changes for greater impact than supporting specific firms. The Afghanistan Regional Agricultural Development (RADP) programs are supporting fruit, nut and vegetable agribusinesses in new product development, processing, and packaging technology. They are also establishing export market linkages to help build competitiveness and exploit opening regional markets for agricultural products.
- Entrepreneurship programs have proven to spur new sectors, especially in the services industry, which many economies still lag behind on, in comparison to other regional countries. Under the Egypt Competitiveness Project (ECP), the roll-out of the U.S. State Department’s Global Entrepreneurship Program actively promoted entrepreneurship development and the start-up of new businesses by creating awareness of how to transform creative ideas into business realities.
Looking to 2016 and beyond, this fresh attention to trade and development may incite a renewed focus on developing countries and least developed countries in particular on some of their specific priorities such as agricultural subsidies and market access. Development actors need to maintain close communication with host-country policy-makers, the private sector, and civil society to make sure that their programming remains current and consistent with the needs of these economies. They should also leverage the increased capacity of host-countries’ public sectors, private sectors, and civil societies to create the needed momentum for increased and inclusive economic growth.
Christy Sisko is a manager in Chemonics' Economic Growth and Trade Practice. David Fischer is an international trade expert and former director and chief of party at Chemonics.
Posted on January 21, 2016 by
The business case for promoting in women’s economic empowerment
is clear. According to a recent McKinsey Global Institute Report
, expanding and
improving women’s economic participation can add as much as $12
trillion to $28 trillion to the global GDP by 2025. In addition, as
studies consistently affirm, an investment in a woman’s economic
empowerment is an investment in the health, education, and security
of her family.
With new international trade agreements, such as the Trans
Posted on January 14, 2016 by
Doina Nistor is chief of party for USAID’s Moldova
Competitiveness Enhancement Through Workforce Development and
Innovation (CE-WIN) project. She also served as chief of party for
the predecessor projects, Competitiveness Enhancement and
Enterprise Development (CEED) I and II. Before going into
development, she worked in Moldova’s private sector.
Q: CEED had success using USAID’s Global Development
Alliance (GDA) model in Moldova’s information technology (IT)
sector. Can you describe the...
Posted on October 15, 2015 by
The World Bank predicts that India will receive $70 billion in
remittances from its diaspora around the world in 2015. In absolute
terms, this is the
largest volume of remittances of any country
in the world
(followed by China, the Philippines, Mexico, and Nigeria). It is
also more than six times USAID’s
entire budget request
for fiscal year 2016 and is continuing to
grow at an average rate of nearly
annually. Redirecting a small fraction of this vast
pool of capital could go a long...
Posted on October 13, 2015 by
Globally, the number of people living outside their country of
origin has almost tripled — from 76 million to 232 million — over
the past 45 years. For many who leave their homes, starting a new
life in search of refuge, employment, education, or other factors
does not mean disregarding their heritage or the family and friends
they left behind. Motivated by diverse factors, such as emotional
ties, economic opportunity, social status, and political influence,
diaspora communities have been giving...
Posted on September 29, 2015 by
As a landlocked country of about 3.6 million, nestled between
European Union (EU)-member Romania and Ukraine, Moldova has
Since gaining its independence in 1991, Moldova’s gross domestic
product (GDP) has actually declined from Soviet-era levels. Part of
the reason is that the government has hampered Moldovan export
sales with prohibitive customs requirements that are
time-consuming, unduly complicated, and unnavigable to
As is the case in other developing...
Posted on September 25, 2015 by
Today, the United Nations
Sustainable Development Summit opens in New York. More than 150
world leaders are expected to gather there to adopt the proposed
Sustainable Development Goals (SDGs), an ambitious document meant
to define the world’s development agenda for the next 15
With 17 goals and 169 individual targets, the SDGs are more
numerous and complex than their predecessor, the Millennium
Development Goals (MDGs), adopted in 2000. But they are hugely
important, both individually and...
Posted on September 22, 2015 by
This blog was originally published by the SEEP Network
is cross-posted with permission.
There are approximately 500 million smallholder farms in the
world providing up to 80 percent of food consumed in Asia and
Sub-Saharan Africa. Unfortunately, despite smallholder farmers’
substantial role in the world’s access to food resources, they
consistently face constraints including poor access to improved
inputs, reliance on rainwater for irrigation, poor natural resource
Posted on September 10, 2015 by
Success in the fashion industry, in any country, requires a
delicate balance between artistic ability and keen business skills.
As a designer, you need to not only understand what your market is
and what customer you are targeting but what trends are emerging
and how your personality will come out in your collections. The
“toolkit” for a designer is clearly a multifaceted one and
undoubtedly one that is changing as quickly as what trends are
hitting the streets each season.
For young designers in...
Posted on September 1, 2015 by
Ibrahim Osta is the chief of party for the Building Economic
Sustainability Through Tourism (BEST) program in Jordan, which
focuses on improving the country’s tourism sector and ensuring that
Jordan has the skilled workforce needed to keep the sector
BEST program works at the intersection of tourism and economic
development. Could you elaborate on how those two issues are
and tourism is the world’s largest industry. With more than one
billion people crossing...
Posted on August 27, 2015 by
Cairon Macmac, a merchant who selling pearls in the Philippines,
was one of the first in her market to start using GCASH to sell
pearls to her customers. Cairon was introduced to mobile
e-money by the Chemonics team managing USAID’s
Microenterprise Access to Banking Services (MABS)
in 2010. She now accepts all local and international credit
cards using a mobile point-of-sale system. Her dream is to
one day have her own website and sell online.
Currently, the USAID E-PESO activity...
Posted on August 14, 2015 by
The very first proposed goal of the new Sustainable Development
Goals (SDGs) is simply this: “End poverty in all its forms
This is an incredibly bold statement. A commitment to END
POVERTY. In ALL ITS FORMS. EVERYWHERE. I usually avoid writing in
all caps, but in this case, I feel the need to emphasize just how
significant a commitment we are making to ourselves and to our
world. Bold letters don’t even do it justice. I have worked every
day for the past 15 years to end poverty; it’s...
Posted on July 23, 2015 by
Proposed Sustainable Development Goal (SDG) 8 is to “promote
sustained, inclusive and sustainable economic growth, full and
productive employment and decent work for all.” For those who are
familiar with the existing Millennium Development Goals (MDGs),
this language may sound familiar. Under Goal 1 of the MDGs, the
second target is, “achieve full and productive employment and
decent work for all, including women and young people.”
So what is really new with the
SDGs in the world of economic...
Posted on July 7, 2015 by
Melissa Scudo is the team leader for the Tunisia Tax and
Customs Reform Activity (TCP)—a two-year initiative to help the
government of Tunisia bolster economic growth through tax and
customs reform. TCP is part of Chemonics’ Asia and Middle
East Economic Growth Best Practices (AMEG)
Q. Regional turmoil makes
this a challenging time to implement a reform project in the Middle
East and North Africa. In a changing Middle East landscape, how
does your work on tax reform fit into helping...
Posted on June 4, 2015 by
Consortium on Governmental Financial Management (ICGFM)
convening this week in Miami, Florida, with the shared interest of
improving public financial management in their respective
countries. To kick off the conference
Financial Management Specialist Svetlana Klimenko from the World
Bank highlighted the importance of public financial management
within the larger context of the Millennium Development Goals
(MDGs), and the soon-to-be established Sustainable...
Posted on May 29, 2015 by
In this photo, the owner of a small business in Ucayali, Peru,
works with an employee to create a product using seeds from the
Amazon rainforest. The business, Pro Mujer Oriente, employs 54
women to make handicrafts using tree materials. The
Peru Environmental Management and Forest Governance Support
, or Peru Bosques Project, supported Pro Mujer Oriente
to establish partnerships by participating in national trade fairs
and to improve the appearance of its products. With...
Posted on May 28, 2015 by
In order to drive the economy, increase employment, and raise
incomes, countries need to develop and maintain laws, regulations,
policies, trade agreements and public infrastructure that
facilitate the growth of business. Together with social norms,
these constitute the business enabling environment. In April
2015, Eileen Hoffman, the director of Chemonics’ Economic Growth
and Trade practice, sat down with Mr. Aleksi Aleksishvili, the
general director and founder of the Policy and...
Posted on April 30, 2015 by
Earlier this year, Chemonics joined the SEEP Network
—a global network of
international development organizations dedicated to fighting
poverty by promoting inclusive markets and financial
systems. SEEP is active in 170 countries and reaches nearly 90
million households around the world.
For years, we have been attending the annual conference
side-by-side with SEEP Network members in the field. Now, as new
members ourselves, we are eager to join in many of SEEP’s
Posted on February 11, 2015 by
The World Bank Doing Business report is a tool that is used by
the public and private sectors to determine the opportunities and
challenges of doing business in various countries. The 10 key
indicators tracked by the report comprise one of the measurement
tools used by Chemonics projects seeking to improve the business
enabling environment of the countries in which they operate.
Chemonics currently implements 12 projects with primary objectives
that include business enabling reforms and, of...
Posted on November 17, 2014 by
Every year the annual SEEP conference provides economic
development practitioners with opportunities to learn about and
discuss innovations and successes from projects around the world.
While the annual conference is always full of new ideas and
trend-setting professionals, the 2014 conference stands out for
bringing the idea of “big data” to development in a way that
demonstrates how powerful it can be as part of our project
management, planning, monitoring, and evaluation activities. The