1 Trade, Development and Poverty Linkages: Lessons and Future Directions June 23, 2009 CUTS International  Conference on

2 The Project: Linkages between Trade, Development and Poverty Reduction  Conference presents the key findings and lessons learnt from 13 country experience (Eastern and Southern Africa and South and South East Asia) studied under the subject-mentioned project commonly known as “TDP” over  Project spans across 15 countries in the key findings and lessons learnt from 13 country experience (Eastern and Southern Africa and South and South East Asia and Europe, covering developing land-locked states, island states and big emerging economies as well as developed countries.  Partnership with 19 organisations covered from 13 countries.  Supported by the Department of International Development (DFID), UK and the Ministry of Foreign Affairs (MINBUZA)

3 The Project (Cont.)  Systematically analyses the impact of trade openness on poverty reduction and  emphasises that a unique trade development policy linkage does not exist; it depends on country specific conditions

4 Project Outputs  39 national research papers,  2 synthesis volumes,  21 briefing papers and advocacy documents,  52 national dialogues, 14 international and regional conferences

5 The Link with Development and Poverty Reduction  The project’s unique contribution lies in outlining the pre-conditions and flanking policies needed for exploiting synergies between trade, development and poverty alleviation.  The trade-development-poverty linkages are not observed to have same intensity or nature in different countries. Pre-conditions and flanking policies – for instance infrastructure, human capital and social safety nets seem to play a crucial role

6 What Project finds: Example: Tariff vs. growth Out of the 13 TDP project countries, with the exception of South Africa, Sri Lanka and Uganda, the balance 10 countries were having average tariffs higher than the developing country average in Of those 10 countries, 7 (viz, Bangladesh, Cambodia, China, India, Nepal, Tanzania and Vietnam) had GDP growth rates higher than the developing country average. In 2001, Bangladesh and India were amongst the most closed economies, nevertheless their annual average growth for the period had been higher than most of the developing countries.

7 What Project finds (Cont’d) One can compare Kenya and Vietnam- the two countries with almost identical tariff profile- the former struggled to ensure an annual average growth of 2% as against the latter’s average growth of 7.3%. Amongst the 13 TDP countries, only Uganda had shown impressive growth performance with comparatively smaller average tariffs.

8 To get some idea about the relationship between changes in poverty and changes in income in the TDP project countries. (For ) Vietnam has had the highest rate of poverty reduction followed by India and China. On the other hand, despite some modest growth, poverty situation has deteriorated in Kenya and Pakistan and remained unchanged in South Africa. India appear to have the largest elasticity of poverty as during ( ), a 1% annual growth in the country has been associated with 0.8% decline in poverty headcount index. Vietnam and Nepal are two other Asian countries to demonstrate impressive pro-poor growth.

9 Cont’d Amongst SSA countries in the sample, Uganda performs the best while Kenya the worst. Take the three countries with widely varying experiences –Cambodia ( annual average growth 7.7%) Sri Lanka (annual average growth 4.5%), and Tanzania (annual average growth 3.2%). However when the poverty alleviation effects of their growth are considered, not much difference can be found amongst them. By contrast, as already referred to, despite having comparable growth rates, poverty reduction experiences of Bangladesh and India have been remarkably different.

10 Project Evaluation “The project has been very prolific in terms of outputs produced. … there has been no other donor funded project of such a magnitude and geographic canvas, which could be compared to the TDP project. Viewed together, there is now an enormous wealth of knowledge of the various manifestations of the Trade- Development- Poverty linkages across continents, which provides a well-rounded base for policy makers as well as advocacy organizations to articulate positions and demands for a more effective pro-poor policy formulation and, more importantly, implementation. The TDP can claim to be one of the most visible efforts in recent years on the Trade and Poverty Linkages” Ace Global, February 2009

11 Project Evaluation “The TDP project has delivered a substantial body of information on trade development and poverty issues. This provides a good knowledge base for further analysis and for the formulation of a research based influencing strategy” “CUTS plays an important role in helping to strengthen the capacities of Developing and Least Developed countries on trade, development, investment and competition issues through providing in-depth analysis based on national level research undertaken by local organisations. These governments appreciate CUTS emphasis on using local research experts and consulting with governments as this results in research that captures realities often missed by external consultants” DFID and MINBUZA, June 2009

12 Panel Discussion Two Decades of Trade Liberalisation: The Links with Development and Poverty Reduction

13 Specific Questions  Can trade at all significantly affect poverty and how?  How well can the experiences of trade-development-poverty linkages in developing countries be generalised?  Is the nature of policies / institutions crucial to the realisation of this linkages? Why and why not?  Given current Doha round of experience, can WTO foster this linkage / synergy and how?