Untying aid to the least developed countries (LDCs) of the world has been an objective at the Organisation for Economic Co-operation and Development (OECD) for many years. Now a breakthrough has been made which could see the world’s poorest countries being able to spend more of their bilateral aid funds according to market demands, rather than those of donor governments.

Jean-Claude Faure is Chair of the Organisation for Economic Co-operation and Development’s Development Assistance Committee (OECD/DAC). In this interview, he responds to questions about the DAC’s recent Recommendation on untying aid to the least developed countries.

“LDCs are being bypassed by the process of globalization...[but] the share of trade in GDP remains relatively high in most LDCs compared with other developing countries.”

How can LDC firms take greater advantage of the rapid growth in world trade? What can be done to make LDC export successes more the rule than the exception?

Three lessons from LDC success stories

"Behind the obvious, somewhat old story — namely the loss of LDC market share in world trade resulting from the price collapse of raw commodities — there is a new, more hopeful and more exciting grass-roots story. This is the story of a new generation of LDC entrepreneurs and investors who are finding ways to leverage the opportunities created by global trade liberalization to start rebuilding their countries’ export base.

In many respects, the overall picture of LDCs often changes for the better when we look at the situation more closely.

The ITC and Government of Norway Business Sector Round Table (BSRT) held on 16 May 2001 at the Third United Nations Conference on the Least Developed Countries (14-20 May 2001) put a surprising spotlight on the situation of the world’s 49 poorest countries. The BSRT showed that many exceptional entrepreneurs from least developed countries (LDCs) have been able to achieve export success — often with important benefits for their workers and communities. Twenty went to Brussels to tell their LDC success stories to the more than 250 people — business executives and senior trade officials from LDCs along with multilateral agency and donor government representatives — who took part in the round table. We gathered many more of these success stories, which are featured on the BSRT web site (http://www.intracen.org/bsrt/) and in our publication on turning LDC export opportunities into business.

It’s unlikely that anyone who attended the ITC Business Sector Round Table (Brussels, 16 May) at the Third United Nations Conference on Least Developed Countries did not come away encouraged by the inventiveness, ingenuity, perseverance and energy of entrepreneurs in even the poorest of developing countries. We heard from a Nepalese venture capitalist who nurtures and trains new entrepreneurs, a Tanzanian who has virtually created an international market for indigenous gemstones, a Samoan woman who has found a niche in the United States health food market for a local fruit juice, and a Haitian who has become the world’s biggest exporter of perfume essence, among many others. As we learned later, several of the entrepreneurs used the occasion to explore business opportunities and network among themselves.

How can successful exporters in least-developed countries (LDCs) convert export opportunities into business? New export opportunities and trade liberalization measures have helped some LDC exporters become a success, noted 75 LDC exporters and senior policy-makers, in a Business Sector Round Table organized by ITC (Brussels, 16 May 2001).

The Oxford Analytica article describes well the formidable, but surmountable constraints to integrating LDCs into the multilateral trading system. It concludes that vitally needed financial and technical assistance for LDCs will materialize only if “potential donors can be convinced that trade-related assistance is central to the development process”. The issue is real; it transcends LDCs, as overall trade-related technical assistance is relatively quite limited.

The Integrated Framework and other trade-related assistance programmes were intended to reverse the growing marginalization of sub-Saharan Africa and other least-developed countries (LDCs) in the world trading system. They were launched with high hopes, but have since made little progress owing mainly to a lack of funding.