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Trade and Development Report 2002

Developing Countries in World Trade

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The Trade and Development Report 2002 (TDR 2002) analyzes trends and outlooks for the world economy and focuses on export dynamism and industrialization in developing countries. It demonstrates that, although integration into world trade is essential, it is not in itself sufficient for ensuring a country's development. The Report questions the conventional wisdom that export growth and foreign direct investment (FDI) automatically generate commensurate income gains. Why is it that developing countries are trading more, but earning relatively less? UNCTAD thinks they are competing among themselves to export similar labour-intensive manufacturing products to the same markets. It suggests that countries should move into higher-value exports by upgrading technology and improving productivity. What next for developing countries after Doha and Monterrey? And what will China's WTO accession mean for other developing countries - and for China itself? There are signs that a world economic recovery may be under way. If so, will it be sustained at a fast enough pace to benefit most developing countries? This would require a 3% growth rate in the industrial world - a rather unlikely prospect, predicts UNCTAD.

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Overview

It is a sign of troubled times when, in the search for solutions to the most pressing policy challenges of the day, it is considered necessary to look to earlier generations for guidance: a Marshall Plan – this time to fight global poverty – a Tobin tax to check financial volatility and a Keynesian spending package to combat deflationary dangers spring readily to mind. The source of the trouble is the gap between the rhetoric and the reality of a liberal international economic order. Nowhere is this gap more evident than in the international trading system. Even as Governments extol the virtues of free trade, they are only too willing to intervene to protect their domestic constituencies that feel threatened by the cold winds of international competition. Such remnants of neo-mercantilist thinking have done much to unbalance the bargain struck during the Uruguay Round.

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