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High trade growth for least-developed countries

The value of the total exports of least-developed countries (LDCs) including goods and commercial services, grew by 23.9 per cent in 2011 to reach US$229.8 billion, according to the World Trade Organisation (WTO). However, the LDC coordinator in the WTO, pointed out that “a lot remains to be done”.

Welcome trade growth for LDC but poverty remains a major problem

LDCs’ exports of manufactured goods and commercial services expanded by 24.8 per cent and 15.6 per cent, respectively. Exports of fuels and mining products grew by 25 per cent. While this looks encouraging on the surface, a lot of this growth in value was provided by higher prices, especially in the fuel and mining sectors.

A more realistic figure is that the LDC share in world trade (exports and imports) increased from 1.09 per cent in 2010 to 1.12 per cent in 2011. Although this is at least moving in the right direction it is a fairly miniscule increase.

However, due to the strong growth of commodities exports, the trade balance in goods of the LDCs narrowed down considerably in 2011, showing a deficit of US$3.3 billion as against $26.5 billion in 2009.

Also significant is that during the past ten years there has been a fundamental change with regard to destination markets for goods originating from LDCs. At the beginning of the decade, 53% of LDC exports went to developed countries. But by 2011, their share shrank to 41 per cent. On the other hand, LDCs’ exports to developing countries had expanded more than seven-fold to account for 52 per cent of their total exports in 2011.

China has been the biggest destination for LDC exports since 2008 with India in second place. However, LDCs still hold a disproportionately low share of international trade and many members of the WTO have called for more Aid for Trade for these countries. Whilst the improvement in trade is a welcomed one, especially during a period of global crisis, it is nowhere near sufficient to deal with the problem of poverty in most LDCs.

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Posted in International Trade, Least Developed Coutries, World Trade, World Trade Organisation

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