Economic transformation and progress towards the SDGs through trade
Global trade can be a powerful source for economic transformation. As underlined by the Bridgetown Covenant, its rapid expansion has enabled the emergence of some nations from the periphery of the world economy and into the global spotlight and ...significant reduction of poverty -—
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—-. However, the impressive expansion of global trade, investment and technology registered over the past decades has unfortunately not resulted in benefits for all -—
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—-. Since 2011, the LDCsLeast developed country have hardly increased their share of global trade. Almost two thirds of developing economies remain commodity dependent1 or tied to lower-value activities in manufacturing or services sectors.
Trade in goods and services in developing economies and LDCs reached a record level in 2022
The COVID-19COVID-19 is an infectious disease caused by the strain of coronavirus SARS-CoV-2 discovered in December 2019. Coronaviruses are a large family of viruses which may cause illness in animals or humans. In humans, several coronaviruses are known to cause respiratory infections ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS). The most recently discovered coronavirus causes coronavirus disease COVID-19 -—
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—-. pandemicCommonly described by the WHO as ‘the worldwide spread of a new disease’, no strict definition is provided. In 2009, they set out the basic requirements for a pandemic: • New virus emerges in humans
• Minimal or no population immunity
• Causes serious illness; high morbidity/mortality
• Spreads easily from person to person
• Global outbreak of disease.
The US Centre for Disease Control uses a similar approach, but with a reduced set of criteria. It is very difficult to gauge whether the spread of a disease should be termed an outbreak, epidemic or pandemic. In other words, when to declare a pandemic isn’t a black and white decision -—
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—-. has hampered international trade and led, in 2020, to the drop of exports of goods and services of developing economies and LDCs by about 9 per cent and 15 per cent, year-on-year, respectively. Since then, total trade recovered and, in 2022, hit a record high of US$13 trillion for developing economies and US$317 billion for LDCs (Figure 1). Trade in goods for both groups expanded at a faster pace than trade in servicesIn the international trade in services context, services are understood as the result of a production activity that changes the conditions of the consuming units or facilitates the exchange of products or financial assets -—
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—-. Following the balance-of-payments classification, trade in services refers to manufacturing services, repair services, transport, travel, construction, telecommunications, computer services, financial services, insurance, intellectual-property related and other business services, as well as personal and cultural services, and government services., registering, in 2022, 40 per cent growth from 2019. It was worth US$11 trillion for developing economies and US$268 billion for LDCs. In contrast, trade in services of developing economies remained relatively small and grew by 15 per cent compared to pre-COVID-19 levels, while for LDCs, trade in services dropped by about 1 per cent.
Source: UNCTADstat -—
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Note: Year 2022 figures are estimates.
LDCs’ participation in world trade lags further behind other developing economies
In 2022, developing economies’ share in world exports has risen to about 42 per cent, compared to 37 per cent in 2010 (Figure 2). For LDCs, the SDGSustainable Development Goal target 17.11 of doubling their share of global exports by 2020 from 2011 (2 per cent target) was not met. Despite the growth of their exports in absolute terms during the period, LDCs’ share in world exports of goods and services has hovered around 1 per cent since 2011. In comparison, the indicator averaged 39 per cent in the same period for developing economies. LDCs accounted for about 0.9 per cent of world goods exports and 0.2 per cent of world services exports.
Source: UNCTADstat -—
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Note: Year 2022 figures are estimates.
Only a few developing economies significantly increased their share in world exports of goods and services from 2011 to 2022 (Map 1). There was a tenfold increase for Timor-Leste and a ninefold for Djibouti. Armenia, Cambodia, Benin, Lao People's Democratic Republic, Niue, Sao Tome and Principe, and Viet Nam also more than doubled their shares. Guinea increased its share in global exports from the small base of 0.006 per cent in 2011 to 0.04 in 2022. As for China, it increased its share by 1.4 times during the same period. The share in exports of goods and services declined in Lesotho, Malawi, and Vanuatu.
Source: UNCTADstat -—
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Note: Year 2022 figures are estimates.
In 2021, top export destinations for developing economies and LDCs included the United States of America, with about 17 per cent for developing economies and 8 per cent for LDCs, China with about 13 per cent and 23 per cent, respectively, and India with 4 per cent and 7 per cent, respectively (Figure 3).
Source: UNCTADstat -—
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China’s exports growth of high-tech manufactured goods slows
Over the past decade, China has emerged as a prominent force in the exportation of high-tech manufactured goods. In 2021, China alone accounted for an impressive 19 per cent of global exports of high-skill and technology-intensive manufactures (Figure 4). To put this into perspective, the United States of America and Germany each held approximately 8 per cent share in the global exports of these goods.
Source: UNCTADstat -—
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Note: Manufactured goods by degree of manufacturing groups refers to the April 2023 classification, as specified in -—
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—- and is according to the three-digit level of SITCStandard International Trade Classification. The commodity groupings of SITC reflect (a) the materials used in production, (b) the processing stage, (c) market practices and uses of the products, (d) the importance of the commodities in terms of world trade, and (e) technological changes. Revision 3.
After an unusually high export growth of 29 per cent in 2021, year-on-year, the growth of China’s exports of high-skill and technology-intensive manufactured goods slowed to 2 per cent in 2022 (Figure 5). On-going geopolitical tensions and global trends of supply chain diversification drive this slowdown. While exports of high-skill electronics and parts and components for electrical and electronic goods declined (about 8 per cent and 2 per cent, respectively), the exports of other high-skill goods, excluding electronics grew (15 per cent), including goods like miscellaneous chemical products and inorganic chemical elements.
Source: -—
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Note: Manufactured goods by degree of manufacturing groups refers to the April 2023 classification, as specified in -—
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—- and is according to the three-digit level of SITC Revision 3.
Developing economies in Africa continue to struggle with trade diversification
Developing economies’ exports concentration index in 2021 stood at 0.09 (Figure 6), notably higher than for developed economies (0.06). Exports are most concentrated in Africa (0.21) (Figure 6). The export mix was more varied in the developing economies of Asia and Oceania (0.11). LDC’s export concentration stood at 0.19, and SIDSSmall island developing states (SIDS) were recognized as a distinct group of developing countries at the Earth Summit in Rio de Janeiro in June 1992. More information on UNCTAD official page. at 0.21. While the exports of these economies are still highly concentrated, developing economies have managed to reduce export concentration in the last 10 years. In 2021, top 25 countries with the highest concentration index were all developing economies, seven of them LDCs.
Source: UNCTADstat -—
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Note: The concentration is measured by the Herfindahl-Hirschman Index (HHI). An index value closer to one indicates that a country’s exports or imports are highly concentrated in a few products. On the contrary, values closer to zero reflect a more homogeneous distribution of exports or imports among a series of products. The country grouping refers to the April 2023 classification, as specified in -—
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In 2021, manufactured goods accounted for about 70 per cent of total merchandise exports from developing economies, with China accounting for almost half of the total exports of manufactures of the group. The share of fuels has reduced from about 23 per cent in 2010 to 13 per cent in 2021, largely due to volatility of primary commodities prices. Ores, metals, precious stones, and non-monetary gold accounted for about 8 per cent of total exports of developing economies, followed by food (8 per cent) (Figure 7).
Merchandise exports of LDCs are largely focused on primary commodities and simple manufactured products, such as textiles and clothing. In 2021, manufactured goods accounted for 34 per cent of total exports in LDCs, an increase of 13 percentage points from 2010. Ores, metals, precious stones, and non-monetary gold were another largest product group in 2021 (29 per cent), followed by fuels (20 per cent). The share of agricultural products (agricultural raw materials and food) in LDCs' exports increased from around 9 to about 13 per cent during the same period.
Source: UNCTADstat -—
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Services exports are highly concentrated in a few countries
Trade in services is highly concentrated, with mainly the same countries ranking as leading services exporters since 2010. China, India and Singapore are the top three developing-country exporters and accounted for 15 per cent of global services exports in 2022 (Figure 8). China, the leading exporter of services among developing countries, ranked third globally in 2022. Singapore ranked eleventh in 2010, but increased its share to about 4 per cent, making it the eight largest exporter of services in the world in 2022. In 2022, three developing economies reached the global top 10 exporters group, while in 2010 there were only two.
Source: UNCTADstat -—
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—- based on UNCTAD-WTO services dataset.
Note: Year 2022 figures are estimates.
From the beginning of the pandemic in 2020, the exports structure of developing economies as a group has been dominated by services other than transport and travel. By contrast, LDCs' international services sales have been dominated by travel, except for the pandemic years 2020 and 2021, in which transport topped LDCs’ services exports. (Figure 9)
Source: UNCTADstat -—
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—- based on UNCTAD-WTO services dataset.
Note: Year 2022 figures are estimates. Other services cover a heterogeneous group of products dominated by various business services, telecommunications and computer services, and intellectual-property, insurance and financial services. They also include construction, personal, cultural and recreational services, goods-related services, and government goods and services.
Growth in trade of transport and travel services of LDCs follow the same tendencies as in the group of developing economies. In other services it has not been the case in recent years. In 2021 and 2022, developing states recorded 17 and then four per cent rise in other services, while LDCs registered decline for both years (Figure 10).
Source: UNCTADstat -—
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—- based on UNCTAD-WTO services dataset.
Note: Year 2022 figures are estimates.
Growing importance of telecommunications, computer, and information services in exports of developing economies
Exports of telecommunication, computer, and information services by developing economies have been steadily growing since 2010 (Figure 11). The pace of growth picked up further, as the pandemic closedowns solicited larger and innovative usage of these services. The trend has continued in the post-pandemic times. Since 2014, the growth of exports of telecommunications, computer, and information services from LDCs had been slowing down, but had picked up from 2020 on, with the pandemic.
Source: UNCTADstat -—
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—- based on UNCTAD-WTO services dataset.
Note: Year 2022 figures are estimates.
Small and vulnerable economies hit harder by tourism losses during the pandemic
Tourism sectorTourism sector is the cluster of production units in different industries that provide consumption goods and services demanded by visitors. Such industries are called tourism industries because visitor acquisition represents such a significant share of their supply that in the absence of visitors, the production of these would cease to exist in meaningful quantities -—
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—-. and its economic importance had been growing for most developing economies over the first two decades of the century, until the COVID-19 pandemic brought touristic activity to an abrupt plunge in 2020. In 2019, direct contribution of tourism to GDPGross domestic product (GDP) is an aggregate measure of production, income and expenditure of an economy. As a production measure, it represents the gross value added, i.e., the output net of intermediate consumption, achieved by all resident units engaged in production, plus any taxes less subsidies on products not included in the value of output. As an income measure, it represents the sum of primary incomes (gross wages and entrepreneurial income) distributed by resident producers, plus taxes less subsidies on production and imports. As an expenditure measure, it depicts the sum of expenditure on final consumption, gross capital formation (i.e., investment, changes in inventories, and acquisitions less disposals of valuables) and exports after deduction of imports -—
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—-. stood at 3.8 per cent of GDP for developed countries and at 5.1 per cent for the developing (Figure 12). Tourism is very important for SIDS: before the pandemic in 2019, estimated at 7.1 per cent of GDP. With the pandemic lockdowns in 2020, developing economies lost more than half of the tourism contribution to GDP, while the developed world lost a third. For SIDS, the plunge was even more pronounced, as in 2020 the contribution of tourism to GDP had dropped to only one fifth of the level recorded in 2019.
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Inbound tourist arrivals to developing economies had steadily been growing up to 2020, when they plummeted to their lowest levels for decades (Figure 13). Then, in 2022, developing economies recorded 446 million inbound visitor entries, accounting for 50 per cent of the 2019 numbers. For 2022, LDCs also registered half of the pre-pandemic inbound arrivals. SIDS reported 54 million arrivals, representing a solid recovery though still 30 per cent below the 2019 level.
Source: -—
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Note: Year 2022 figures are UNCTAD secretariat’s preliminary estimates.
Inbound tourism expenditures (tourism exports) recuperated in 2022 but remained below the 2019 levels globally. Estimates indicate that developing economies recovered close to 85 per cent of the pre-pandemic tourism receipts, LDCs recovered 95 per cent, while SIDS surpassed the 2019 inbound tourism expenditures by some 8 per cent (Figure 14).
Source: UNCTADstat -—
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—- based on UNCTAD-WTO services dataset.
Note: Year 2022 figures are UNCTAD secretariat’s preliminary estimates. Tourism exports (inbound tourism expenditures) include two BPM6 services items: travel and passenger transport.
TrainForTrade has a global impact: nearly 15 000 trained from over 200 countries
Source: UNCTAD TrainForTrade.
UNCTAD TrainForTrade provides bespoke technical assistance globally, with an emphasis on developing countries. It follows three goals:
- Build sustainable networks of support and knowledge exchange to enhance South-South cooperationBroad framework of collaboration among countries of the Global South in the political, economic, social, cultural, environmental and technical domains. It includes trade, FDI, regional integration efforts, technology transfers, sharing of solutions and experts, and other forms. Involving two or more developing countries, it can take place on a bilateral, regional, intraregional or interregional basis -—
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—-. and national ownership; - Promote digital solutions and innovative thinking to strengthen the capacities of international trade players;
- Encourage development-oriented trade policy to reduce poverty and to promote transparency and best practices in trade.
To accomplish these objectives, TrainForTrade combines e-learning, face-to-face and hybrid activities: an environmentally friendly and cost-efficient approach, providing mass access to high-quality education while allowing the training of individuals chosen for their capacity to impact their communities. TrainForTrade currently covers three areas: Port Management, e-CommerceE-commerce is defined as the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders. The goods or services are ordered by those methods, but the payment and the ultimate delivery of the goods or services do not have to be conducted online -—
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—-. and Trade Statistics. Between 2018 and 2022, it held 148 events, in which almost 15 000 people from 218 countries or areas took part (Map 1 and Table 1). These participants completed on average 7.5 days of training. Asia, Africa and the Americas accounted for the bulk of this capacity development, with respectively 43, 27 and 18 per cent of all attendees. TrainForTrade’s team led physical workshops in more than 43 countries, maintaining a strong field presence and an extended network.
Year(s) | Number of participants | Share of women | Number of certificates delivered | Hours of training | Days of training | Number of countries or areas covered | Average score | Satisfaction rate |
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2018 | 871 | 36% | 399 | 66 892 | 10 597 | 66 | 77% | 87% |
2019 | 2 935 | 47% | 1 439 | 127 640 | 22 275 | 165 | 77% | 89% |
2020 | 2 984 | 43% | 1 389 | 92 196 | 17 798 | 171 | 78% | 88% |
2021 | 4 452 | 43% | 2 546 | 145 063 | 28 847 | 178 | 79% | 90% |
2022 | 4 786 | 38% | 2 417 | 170 127 | 32 665 | 189 | 78% | 92% |
2018-2022 | 14 898 | 43% | 8 190 | 601 917 | 112 181 | 218 | 78% | 89% |
Source: UNCTAD TrainForTrade.
Note: For activities lasting longer than one year, the number of participants for each year is shown. For that reason, the number of participants does not add up to the 2018-2022 total. The number of certificates delivered should not be compared to the number of participants as not all activities lead to a diploma.
Over the past five years, TrainForTrade has considerably boosted its global impact (Table B1). The number of participants per year has increased fivefold from 2018 to 2022, while the number of training days per year has tripled. In 2022, TrainForTrade delivered 100 000 additional training hours compared to 2018 and six times as many people obtained a certificate, attesting to the skills acquired. To achieve these results, TrainForTrade relied on the advantages of its longstanding e-learning experience and opened online courses to a broader audience. The Trade Statistics programmes accounted for 58 per cent of all participants, while the Port Management and e-CommerceE-commerce is defined as the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders. The goods or services are ordered by those methods, but the payment and the ultimate delivery of the goods or services do not have to be conducted online -—
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—-. activities represented 34 and 8 per cent, respectively.
Women’s empowerment is a priority. Overall, 43 per cent of all participants were female: an impressive figure given TrainForTrade’s activities related to sectors remaining largely male-dominant worldwide (i.e., port management). To multiply its impact and foster South-SouthBroad framework of collaboration among countries of the Global South in the political, economic, social, cultural, environmental and technical domains. It includes trade, FDI, regional integration efforts, technology transfers, sharing of solutions and experts, and other forms. Involving two or more developing countries, it can take place on a bilateral, regional, intraregional or interregional basis -—
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—-. Cooperation, TrainForTrade systematically trainsTrade Analysis and Information System future instructors who propagate their enhanced capacities and knowledge in their communities. Between 2018 and 2022, 308 high-profile candidates became “trainers” of the Port Management Programme, mostly in Africa and Latin America, after a series of intensive online and face-to-face seminars. With a satisfaction rate reaching almost 90 per cent and an average score approaching 80 per cent, TrainForTrade continues to promote achievement of SDGsSustainable Development Goal (particularly goals 1, 5, 8, 9, 13, 14, 17) and aims to extend a world of opportunities for all.
Notes
- A country is considered to be export-commodity-dependent when more than 60 per cent of its total merchandise exports are composed of commodities.
References
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