UNDP | Poverty Reduction

Trade and Human Development

Key Initiatives | Resources

International trade can play an important role in raising levels of human development and achieving sustainable poverty reduction. UNDP considers trade a means to an end, not an end in itself.

Properly harnessed, international trade can create opportunities for growth, poverty reduction and human development within developing countries, through:

expanding markets: exports allow an economy to overcome the constraints of its domestic market;

raising productivity through increased returns to scale in production, especially in the manufacturing sector, resulting from access to international markets;

accelerated technological development resulting from increased exposure to new technologies and the dissemination of knowledge – exposure to foreign competition, marketing and in particular technological diffusion.

However, none of this is an automatic or inevitable consequence of international trade. In order for developing countries to reap the potential benefits of trade, trade agreements must ensure enough flexibility for countries to establish policies that address human development needs and concerns. This may include a prioritized focus on agriculture, commodities, industrial tariffs, special and differential treatment and services of particular interest to developing countries.

To enable trade to become a meaningful driver of development and a serious contributor to the achievement of the Millennium Development Goals (MDGs), UNDP helps to strengthen capacities in developing countries in three important areas:

Trade competitiveness - The capacity to compete internationally by overcoming supply-side constraints (especially least developed countries)

Trade agreements - The capacity to negotiate, interpret, and implement trade agreements which prioritize poverty and human development concerns

Policy integration - The capacity to integrate pro-poor trade policy in national poverty reduction strategies.

The over-riding aim is to put human development concerns at the forefront so that economic growth and development are viewed as a means towards the achievement of employment, health, education, empowerment etc.

Key Initiatives

Global Initiatives

Trade and Sustainable Human Development
This project seeks to enhance the understanding and operationalization of the linkages between trade and human development. Among other outputs, the project produced the UNDP co-sponsored publication, "Making Global Trade Work for People", which explicitly attempts to place human development issues and concerns at the center of the design of the multilateral trading system. Analytical work linking trade and human development is now acknowledged as a distinct niche contribution of UNDP to the trade and development debate. This has led to the design and implementation of a number of global and regional initiatives, with country based components.

"Making Global Trade Work for People" (London and USA, Earthscan, 2003)
Available in English, Spanish, French, Portuguese, Arabic and Chinese (Mandarin).
The responsibility for opinions in this book rests solely with its authors. Publication does not constitute an endorsement by the United Nations Development Programme or the institutions of the United Nations system or the Heinrich Boll Foundation, Rockefeller Brothers Fund, Rockefeller Foundation, or Wallace Global Fund.

Integrated Framework for Trade Related Technical Assistance (IF) for the Least Developed Countries (LDCs)
The IF was established under the auspices of the WTO in 1997 to support trade capacity development in LDCs. After a slow start in its first phase which was regarded as less than satisfactory by many IF recipient countries and other commentators, a revamped second phase with a number of important changes and UNDP as Trust Fund Manager was agreed.

The IF has two major objectives:

(i) To mainstream trade into LDCs’ national development plans and the Poverty Reduction Strategy Papers (PRSPs), and
(ii) To assist in the coordinated delivery of trade-related technical assistance in response to needs identified by LDCs.

Six agencies (ITC, IMF, UNCTAD, UNDP, World Bank and WTO) coordinate support to participating countries through an IF Working Group with a secretariat located at the WTO. Each beneficiary country is required to establish an inclusive IF national steering committee made up of government departments, the private sector and civil society with the national trade ministry as the focal point. An IF Steering Committee provides oversight for the IF process.

The Integrated Framework web site contains more details on the IF process, the status of implementation in the beneficiary countries and IF enhancement.

The UNDP Inclusive Globalization Team, through its Geneva Trade and Human Development Unit, has been supporting programme countries on a variety of IF implementation and substantive issues, helping UNDP country offices work towards making trade capacity building an integral part of both national poverty reduction and development plans. This involves providing substantive inputs throughout the IF process including during the preparatory activities, the diagnostic phase and the follow-up and delivery of trade-related technical assistance. Significant emphasis is placed on mainstreaming trade into national development plans and poverty reduction strategies.

Regional Initiatives

Asia Pacific Trade and Investment Initiative (APTII)

This project, based in the UNDP regional Centre in Colombo, Sri Lanka, is explicitly designed to strengthen developing country governments’ policy analysis skills and capacity from a poverty reduction and human development perspective at country and regional levels. It involves most Asian developing countries and has already produced over 50 Technical Support Documents in eight sectoral/thematic areas, namely agriculture and food security, fisheries, the movement of natural persons, environmental services, energy services, TRIPS and geographic indications, and investment, in addition to a number of more recent publications on post MFA textiles and clothing trade and other areas.

This research has contributed to the publication of a UNDP regional human development report: Trade on Human Terms: Transforming Trade for Human Development in Asia and the Pacific. The document provides useful analysis for trade policy makers in the region on critical trade issues. It was launched on 28 June 2006 in Cambodia and is intended to provide policy makers in the region with sound policy positions in the negotiations, as well as in national trade policy making.

APTII website
Regional HDR for Asia and the Pacific, Trade on Human Terms: Transforming Trade for Human Development in Asia and the Pacific, UNDP, June 2006.
Human Development Impact Assessment (HDIA) - a paper on HDIA, a
methodology for evaluating the impact on human development of different trade policies in all WTO areas, is currently under preparation.

Trade Capacity Development for Sub-Saharan Africa

This trade capacity development project is a joint endeavor between UNDP and the AU, UNCTAD, ECA, AERC, ASTRN, TWN-Africa and SEATINI. The overall aim is to contribute to a more beneficial integration of sub-Saharan African countries into the international trading and financial systems. Its objectives are:

Strengthen Africa’s capacity for formulating and implementing integrated approaches to capturing higher shares of global trade and trade-related capital flows.
Build effective linkages between trade and poverty reduction initiatives.
Reinforce the negotiating capacities of African trade policy makers and negotiators
Foster continued active participation of NGOs, private sector, academicians and parliamentarians in trade policy-making.
Strengthen regional cooperation and integration, particularly as an instrument for enhancing Africa’s participation in the globalization process.
Promote more evidence-based trade policy making through applied research.

An important strategy of the project is to foster close linkages between trade expansion and poverty reduction efforts. This is expected to be achieved through the promotion of policies that allow trade to contribute maximally to the generation of employment and sustainable livelihood opportunities.

The Arab Regional Trade, Economic Governance and Human Development Project

In recent years, most Arab States have begun reforming their trade policies, as part of a broader economic and governance reform program, to enhance their integration with the global economy and reap the benefits of globalization. These include improved access to the major world markets, more foreign investment and technology transfer, and ultimately faster and more sustainable economic growth, generating sufficient employment opportunities for their people.

The recently launched Arab Regional Trade project has four main objectives:

1) Increased awareness by governments and civil society organizations in the Arab region of the potential national impact of global and regional economic integration through WTO accession and regional/bilateral trade agreements on human development and poverty reduction strategies;

2) Identification of pro-poor trade and industrial policies (including measures to address supply-side constraints) that would help Arab countries grasp the opportunities of globalization and regional integration and achieve sustainable human development and MDGs;

3) Linked to the above, enhanced trade negotiating capacities of Arab countries, with particular emphasis on countries seeking WTO membership and LDCs;

4) Strengthened common perspectives and positions among Arab governments in regional and global trade and economic governance fora and institutions.

These goals are to be achieved through the following activities:

continued pro-active advocacy and awareness raising,
policy oriented and thematic case studies,
training and capacity building of selected institutions and actors,
providing policy advisory services and facilitating policy dialogue,
support to knowledge sharing (cross-fertilization of experiences and lessons learned)
networking.

The advocacy component will build on the momentum created by the January 2005 launch of the Arabic version of UNDP co-sponsored report “Making Global Trade Work for People” by the League of Arab States in Cairo, Egypt.

Commodities

Due to income variability resulting from commodity price fluctuation and the decline in real commodity prices, developing countries that depend on trade in commodities tend to be poor, aid dependent, have unsustainable levels of debt and benefit the least from international trade. From a human development point of view commodity-related issues therefore deserve to be put high on the international agenda.

UNDP in partnership with the Common Fund for Commodities, the Secretariat of the African, Caribbean and Pacific Group of States, and UNCTAD, are jointly organizing a workshop on systemic commodity issues. This event, to be held in Brazil in early 2007, will situate the commodity problematique both in the international agenda concerning the aid-trade-finance nexus and in the changing global economy including technological developments. By bringing together perspectives from commodity producing and consuming countries, the event is expected to raise the profile, awareness and understanding of the commodities problematique, re-launch the commodities agenda from a poverty reduction and human development perspective and identify a global strategy for commodities.