Overview

1. TRADE AS AN ENGINE OF GROWTH AND SUSTAINABLE HUMAN DEVELOPMENTby David LukeSenior Trade Advisor and Coordinator of the Trade and Human Development Unit UNDP Geneva Office

2. Overview • Trade as an engine of growth, human development and poverty reduction • The need for policy to embrace the poor: past and current experience in Asia – insights from UNDP research • Some key issues for Central Asian countries national and international level

3. Trade can be good for sustainable human development and poverty reduction if it… • Provides employment and incomes • facilitates competition, transfer of technology, innovation, develops skills and knowledge • raises productivity • generates revenues • contributes to economic growth, poverty reduction and human development (well-being and enlargement of choices).

4. But it is not enough… • There is no unequivocal conclusion on the direction or dynamics of trade-human development relationship • Trade liberalization does not ensure self-sustaining growth, poverty reduction, gender equality or overall human development. • Other important determinants for HD are: • Initial conditions • Priorities for resource allocation • Social inclusion • Human development requires the enlargement of people’s choices—especially for women and poor people • The current multilateral trade regime is largely driven by trade liberalization and market access

5. Trade is not the end… Trade itself can be: • jobless, rather than job creating • ruthless, rather than poverty reducing • voiceless, rather than participatory • rootless, rather than culturally enshrined • and futureless, rather than environmentally sustainable • A policy framework for trade and government/private sector partnerships are therefore needed • A truly human development-oriented international trade regime would give governments the policy space to design appropriate policies and build the capacity to gain from trade

6. Trade and HD outcomes: the Asian experience(1)(UNDP Asia HD Report 2006) • East Asia’s “miracle” economies have used trade to boost exports and accelerate progress in other areas including education, health and gender equality. • Asia’s opening to the global market has propelled record economic growth and reduced income poverty • Cheap, labour-intensive manufacturing and high-tech goods have made Asia the “factory of the world.” BPO has made Asia an important service centre.

7. Trade and HD outcomes: the Asian experience (2)(UNDP Asia HD Report 2006) • Yet, trade has also exacerbated inequalities, not only between countries but also within national borders, among different areas, sectors and households. • Some of the region’s most open economies – particularly the East Asian success stories – are experiencing “jobless growth,” with job creation lagging far behind workforce expansion. (employment represents the main channel for the effects of trade on human development) • The benefits of free trade have accrued more to highly-paid skilled workers than unskilled workers. In most countries, the burden of unemployment is especially felt on women and young people

8. Trade and HD outcomes: the Asian experience (3)(UNDP Asia HD Report 2006) • Job opportunities and working conditions for women in textiles and clothing in the poorer countries are threatened by competition stemming from the demise of global quotas. • In the face of trade barriers, subsidies, price distortions, and official neglect, agriculture has stagnated and the Asia-Pacific region has become a net agricultural importer, imperiling food security and deepening rural poverty • Relative inequality as measured by the Gini coefficient has risen significantly in Bangladesh, Cambodia, the People’s Republic of China (PRC), Lao PDR, Nepal and Sri Lanka between the 1990s and 2000s (ADB Report 2007)

9. Key lessons from the Asian experience to achieve better HD outcomes • Selective and sequenced opening to trade is crucial to successfully manage globalization that is more conducive to HD • Trade and human development have a two-way relationship: overall, trade ‘winners’ and ‘losers’ are dependent on factors such as the pre-existing health, education and infrastructure development of a country • In the “miracle” East Asian economies, past human development achievements had positively influenced their ability to take advantage of trade opportunities and stimulated a more balanced growth • The overall gains from market-oriented reforms and international integration can be large. But globalization cannot embrace the region’s poor without determined actions on the part of governments and public/private partnerships to implement agreed policies.

10. What possible lessons can be applied to the specific challenges Central Asian countries? Domestically: • Prioritize investment in HD to produce the skills required by more dynamic sectors • Put in place sound trade facilitation and transit transport arrangements given ubiquitous LLDC constraints in the region • Adopt strategic trade, industrial and services policies with flexibility and selectivity with regard to the timing of liberalization of industries and services • Introduce properly sequenced tariff barriers with a clear timeframe for NAMA and require selective performance criteria for services liberalization • Move into higher value-added products (industrial and services) as a way to overcome higher transport costs and boost economic growth • Services are the fastest growing sectors in the world economy and do not have the same delivery constraints as goods (services currently account for over 60 percent of global production and employment but no more than 20 per cent of total trade although growing fast. In OECD countries, service exports and imports have been growing since 2000 at respectively 9.8% and 9.3%  per year on average in current dollars (OECD statistics 2007) )

11. What possible lessons for the specific challenges of Central Asian countries? Internationally: • Any Doha Round outcome should be able to deliver on trade facilitation and be consistent with, and contribute to, MDG-based national development strategies • Central Asian countries should aim at building up productive capacity rather than seeking highly imbalanced bilateral agreements with rich nations • Regional cooperation and integration measures based on production, trade and trade facilitation should be promoted and expanded

12. For more information, please, contact David.Luke@undp.org Thank you for your attention!