Trading an End to Poverty: Bridging the MDG Implementation Gaps Through Trade

We live in an age of wonders. From nano-surgery to space stations, networking sites to solar cells, Internet start-ups to smart capital, the world is a more connected, attractive and safe place than was dreamed possible, even fifty years ago. People live longer, healthier lives, with unprecedented social and political freedoms. Yet, in spite of these achievements, perhaps the greatest wonder is that so much of the world does not share in them. The poorest people still lose one in five children under the age of five, often to preventable diseases, drink unsafe water and have little or no access to basic education or the opportunities to better their lot. Poor women are much more likely to die in childbirth and are even less educated than men.

Our moral imperative to bridge these gaps is obvious and acknowledged in the 2000 Millennium Declaration, signed by 147 world leaders, to reduce poverty significantly by 2015. The resulting Millennium Development Goals (MDGs) clearly spell out the world's main development challenges that are linked to poverty, including hunger, child mortality and gender inequality. It is also clear that resources are needed to tackle these challenges, but there is debate about who should provide them and how much.

Trade creates wealth . As part of the United Nations family, the International Trade Centre (ITC) is committed to meeting the MDGs. For us, trade is the strongest way to break the poverty trap. Our effort to stamp out poverty and its many ills focuses on building up economic wealth by helping poor countries to increase trade. The benefits of using trade to tackle poverty and its causes are not purely financial. When people trade, they acquire skills and knowledge, as well as income. The confidence and self-worth they gain from financing their own progress is a base for further growth that no amount of foreign aid can supply, although it is an often necessary complement.

History, both ancient and modern, shows us that trade and prosperity go hand-in-hand. The rich ancient civilizations of Rome, Carthage, Ghana and Egypt depended on trade for their development, much as the trading powers of today. Our goal is to help more countries become integrated in today's vast global economy, with the diverse opportunities for growth it offers.

Exports to new markets create new jobs and, with better incomes, individuals and Governments can send children to school, build wells, buy medicine and raise living standards generally. Taking part in world trade transforms economies; China, Brazil and India are often quoted in this respect. As their trade has grown, these countries have seen the numbers of people living on less than a dollar a day fall drastically, and a new middle-class emerge.

Yet, in the development community, there is still ambivalence towards using trade to fight poverty. Just 10 per cent of the United Nations Development Assistance Frameworks or country development strategies mention trade. We have to ensure that the voice of those involved in trade is heard when donors and Governments draw up country strategies.

Making trade part of development. With a vision and mandate of "export impact for good", ITC aims to help developing countries choose trade paths that will benefit the most marginalized people in society, as well as those with the most advanced potential to succeed.

We help national policymakers understand poverty concerns in two key areas with long-term consequences. First, trade negotiations -- whether it is the smallholders of India, the cotton-growers of West Africa or the food producers of Kenya -- help negotiators take into account the concerns of their small and marginal enterprises when agreeing to the terms of trade treaties. Second, ITC raises awareness of the needs of small firms and poor communities with those who develop national export strategies, so that they can lay the foundations for a pro-poor approach to development.

We need to pay special attention to the most vulnerable. While East Asia has surpassed the target of halving income poverty, from 30 per cent in 1990 to 10 per cent in 2004, it is a different story in sub-Saharan Africa, home to most of the world's poorest countries, where 40 per cent of people still live on less than a dollar a day, down from 46 per cent in 1990. ITC has committed more resources to least developed countries, small island States and post-conflict nations. Within these countries, it focuses on solutions for small firms and women entrepreneurs -- those who traditionally do not do business across borders -- to increase their business through trade. Most of the world's poor are women. Helping women entrepreneurs to expand their businesses is key to reducing poverty. Our research shows that businesswomen typically invest their profits back into their families and communities.
In post-conflict States, for example, ITC helps restart economic activities and connect small entrepreneurs to global markets. In Sierra Leone, for example, ITC helped revive ginger cultivation and exports to Europe. In Rwanda and Burundi, it promotes the export of essential oils grown and distilled by smallholders. In all these cases, women make up a significant proportion of the farmers. ITC also supports broad-based initiatives, such as "Aid for Trade", which includes more funding to develop business skills and productive capacities. Its country projects include partners from the private sector and the Government. We often work with other development agencies, as well as local and international non-governmental organizations.
Change for good. Our aim is to create a lasting benefit. For trade to contribute to sustainable development, we try to take into account issues, such as social development and environmental protection from the start of our projects, though they make for more complex planning, implementation and evaluation. While the ultimate beneficiaries of our work are small- and medium-sized exporting firms, we work with three main client groups: policymakers; trade support institutions -- trade promotion organizations, exporter associations and quality management institutes -- and the business community, including large companies that act as mentors in several programmes.
We help our partners find business solutions to address health, environment and gender concerns. For example, ITC intends to expand its work on gender, including the launch of a full "Women in Trade Programme" in 2008. At the policy level, it helps countries include a gender perspective in national trade development strategies and assists trade-support institutions to respond to the needs of women exporters. At the enterprise level, it directly links women entrepreneurs to global markets and provides business skills to move them into the global marketplace.
Staying the course. Development, including trade development, is a slow process, requiring people to change their behaviour. There may be internal and external forms of resistance to overcome, which influences the success of trade as a tool for development. Governments need to ensure that everyone benefits; they should consult broadly and often to ensure the development targets are being met. Trade allows developing countries to "do it themselves" -- but only when trade barriers are not blocking them. Rich countries, in particular, need to commit to more market opening, so that the developing world can benefit.
We can do more to inform ourselves about trade development. As citizens, we need to continue to hold our Governments accountable for the pledges they made, whether rich or poor countries. The innovation and drive we witness in so many spheres of activity should also be applied to finding an end to poverty. If we harness it to developing trade, we will see an end to extreme poverty and inequality -- the most anomalous wonder of our time.



A Nut Can Save a Rainforest

In northern Bolivia, ITC worked with a group of enterprising companies that harvest and process Brazil nuts for export. In 2003, the nuts -- the lead export of this poverty-stricken Amazon region -- had a market value of $48 million. But stringent quality standards in the European Union and insufficient disease controls at the production source meant that consignments were being refused. The ITC project, begun in 2001, created a Centre of Training and Quality in Bolivia, which analyses export consignments for compliance with food safety requirements. The Centre provides training in product quality, disease control and monitoring market trends. The building also incorporates sport and social facilities, such as a football field and a theatre, which fill an important gap in the local community. The impact has been measurable: exports more than doubled -- in 2003, they reached 16.3 million kg, up from 7.25 million kg in 1995. This growing industry is helping to save the rainforest. Brazil nut trees grow only in the wild, with one to three tall trees per hectare. At the same time, it creates employment in rural areas and lifts thousands of workers and their families out of poverty.