The Growing Role of Trade as a Development Assistance Mechanism

Gao ID: ID-81-46 August 11, 1981

GAO reviewed how four developing countries use trade in their economic development and how bilateral and multilateral donors assist developing countries in the area of trade. The objectives of the review were to examine for Malaysia, Thailand, the Philippines, and Indonesia, the role of trade in their development and the existing and/or potential obstacles to implementing and/or maintaining a successful trade strategy. In addition, GAO examined how these obstacles are being addressed.

In view of declining foreign assistance programs, developing countries increasingly depend on expanding trade, particularly with the developed countries, to assist in their economic growth. In recent years, developed-country imports from developing countries, as a share of total imports, averaged about 14.5 percent. Trade flows are a function of the international marketplace, but developed-country governments, bilaterally and multilaterally, assist developing countries in their efforts to increase exports. Internal obstacles include, but are not limited to, lack of trained personnel, marketing experience, quality control, and available credit, as well as inadequate infrastructure and bureaucratic red tape. External contraints are posed by the relative strength of the international economy and tariff and nontariff measures in potential or actual markets. Each country, to varying degrees, needs donor assistance to improve its international trade position. Developing countries are responsible for their own development and must play the major role in promoting their own position; supporting efforts by the United States and other developed countries are important. The multilateral and bilateral mechanisms for furnishing trade assistance to the developing countries include the following: (1) the International Trade Center's trade assistant projects in developing countries; (2) the United Nations' special Generalized System of Preferences training projects; and (3) trade-promotion activities through trade promotion information offices located in developed countries.

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