EU-LDC Network conference 2002
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Improving Global Governance for Development: Issues
and Instruments - 7-10 December, Chiang Mai
Session 2.4 - Integrated Framework approach
- Summary
The Integrated Framework (IF) is a form of co-operation linking
trade to poverty, infrastructure and governance. It focuses on technical
assistance according to individual demands of Least Developed Countries
(LDCs).
The first speaker discussed the IF case of Malawi. Malawi has been
experiencing a steep decline in GDP growth rates: from 13.9 percent
in 1995 to 0.9 percent in 2002. General wealth has decreased and
the private sector has almost vanished. For exports the African
country is depending mainly on raw materials.
The IF in Malawi aimed to ensure that Malawi is able to meet its
individual demands in trade-related technical assistance. There
is a need to increase Malawi’s institutional abilities at the domestic
level, such as complying with WTO rules, and at the international
level, e.g. in trade negotiations. The capacity to react to a changing
trade environment also needs to be enhanced. The IF process in the
Southern African country consisted of a country analysis to understand
the macro-economic and trade relations, a needs analysis to specify
the individual needs of Malawi, the identification of projects for
donor funding, and finally plans to receive support from stakeholders.
The Malawi IF has achieved a number of successes, including an
increased awareness of trade issues in the public and private sector.
Most of all, the IF has started a process of change. Therefore,
the IF in Malawi is not a failure, although some objectives have
not been reached, such as more coordination among donors, and the
execution of projects which were identified as hosting potential
for trade capacity building. Commitment of the government and donors
to make changes needs to be improved. Finally, the profile of trade
is still low in Malawi. The speaker concluded that in order to overcome
the problems related to the IF in Malawi several changes are necessary
for the future, including redefinition of partners and ownership,
and improving institutional capabilities. Finally there is a need
for better co-ordination through a secretariat which is independent
from the governments and donors.
The second speaker started with an overview of IF, followed by
the Cambodian IF case, which has been one of the more successful
cases. The IF started in 1996 with six participating agencies including
the World Bank, WTO and UNCTAD. Progress was limited and this resulted
in a review of the IF in 2000. The ‘new’ IF focuses more on the
link between trade and national development plans. Furthermore,
there are more funds available than before 2000. The ‘new’ IF framework
is supported by several agencies, bilateral donors and the LDCs.
An important aspect of the IF is the fact that it attempts to foster
competition among advisors and providers of development funding.
Diagnostic Trade Integration Studies (DTIS) are part of the reviewed
IF. A DTIS is the first step in the IF process and analyses trade
relations, trade structures and other issues. Trade liberalisation
can lead to different outcomes in developing countries. The experiences
in these countries have shown that there is a need for well functioning
institutions, commitment of the government, production capacity
and knowledge on economic and social impacts of WTO membership and
other trade liberalisation initiatives.
The DTIS in Cambodia identified the need to build domestic capacities
in terms of trade and development policies. The Cambodian DTIS emphasised
the role of institutions. Special attention was given to three sectors
that are important for Cambodia: rice production, fish catching
and textiles. In Cambodia the government (Ministry of Commerce)
has been an active participant in the IF approach. The Ministries’
officials encouraged the IF team to give independent advice. On
the negative side, there is criticism that more work could have
been done. For example, there could have been more research input
and a stronger involvement of other government officials. Part of
the reasons for not succeeding in this is lack of time and resources.
The Cambodian government reacted to the outcome of the DTIS with
the publication of a report focusing on several issues related to
trade and technical assistance. The report underlined its commitment
to the suggestions of the DTIS. In retrospect, the role of the government
has been a decisive factor in Cambodia’s IF case. For the future,
it is vital that the start through the DTIS is continued with follow-ups.
The third speaker shared his ideas on the IF from a NGO perspective.
The IF operates within the current framework of trade rules. In
general, the current trade system is unfair towards developing countries.
Since the IF is donor-driven, the speaker considered the framework
as a tool for getting the trade negotiations going. The IF offers
donors the possibility to insert trade policies into the economies
of LDCs. Through the IF donors have links with officials within
LDCs’ trade ministries. LDCs are in a disadvantage as they face
linguistic problems (documents are often in a non-local language)
and time pressures, as a result of limited resources for their institutions.
Furthermore, there is no money within the IF for supply-side constraints.
In the IF there is clearly a theoretical bias put forward by the
World Bank stemming from its ideas that openness automatically fosters
growth and thus poverty reduction. The reality is more complicated.
There is also an institutional bias in the sense that organisations
which do not agree with the bank or IMF will not become partners
for the IF approach.
The speaker concluded that the IF approach is better than individual
donor action, but the framework can be improved by co-ordinating
the IF from within the developing country. In addition, it can benefit
from an increase in participating agencies including civil society.
Most of all, discussion on trade capacity building such as under
the IF will not succeed until negotiation tactics of developing
countries are improved as well.
After the presentations the discussion raised several issues, including
the ownership of the IF. Countries’ ownership of the IF is often
limited. Staffing of ministries in developing countries is a problem
here. A critical issue is also the missing link between IF and PRSPs.
There has been limited research on the effects of IF in terms of
poverty reduction despite the fact that this is one of the main
issues within the IF objectives. In addition, donors often seem
to have different objectives for the IF than only to come to a pro-poor
trade strategy. IF is better called ‘if’ due to the uncertainty
of its effects and conditionalities. Prioritisation is important
to make the IF approach succeed. Finally, it was noted that there
is a need for countervailing forces like other programmes in order
to make the IF perform better.
Session 2.4 - Speakers
Chair: Suthipand Chirathivat
Speakers: Peter Schuil (Imani Development), Sandy
Cuthbertson (Center for International Economics Australia), Jeff
Powell (Bretton Woods Project)
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