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Part III: How can the Least Developed Countries Be Integrated into the Global Trade System

Agriculture is perhaps the most distorted sector, protected by high tariffs, large government subsidies, price supports, various other payments and powerful lobby groups that make reforms politically difficult. The advantages of the African countries ( land, cheap labor and good climate) are necessary but no longer sufficient conditions to secure their comparative advantage in the world or even in their own local market since they cannot afford to subsidize their agriculture sector and face prohibitive tariffs for their products abroad.


Nearly 1/3 of the developing countries agricultural trade is with other developing ones and this share is growing. But many developing countries also have substantial trade barriers on agricultural products. The emerging economies in particular still apply tariffs to agricultural products that average more than 25% and are higher than the tariffs imposed by many low-income countries. The united front that the developing countries presented in the trade negotiations on an agricultural trade agreement has fallen apart when the developing countries tried to reach an agreement on their own agricultural trade barriers. Many countries with strong agricultural export potential demanded more open markets, while others  were more concerned about the negative effects on their poor farmers and were reluctant to endorse these measures.


For all these reasons, the  recent  main focus of the debate on the impact of globalization on the least developed countries has shifted to an analysis of alternative policies that these countries themselves and the international community at large should implement in order to promote their integration into the global trade system, increase their gains from the rapidly growing world economy, accelerate their growth and reduce their poverty. The changes in the structure and organization of world production and trade, discussed in the previous parts, demand, however, a whole new approach to the analysis and the formulation of policies that these countries should implement. Apart from donor country and international organization assistance, the future growth of these countries will be determined by the active support that will enable them to increase their exports, attract foreign investments and be integrated into the world economy. This support is necessary since in recent years the global production and trade systems have both evolved at a higher speed, and in new directions.


The low-income developing countries face several critical choices about their future economic policies and their goal to accelerate their growth and make it more pro-poor.


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February 15, 2008
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