SURFING ON THE TIDE? LEAST-DEVELOPED COUNTRIES TRADE DURING THE GREAT GLOBAL TRANSITION
Abstract
The rebalancing of global demand towards large emerging countries and the resulting long-lasting cycle of high international commodity prices had a profound impact on LDC trade. This process contributed to a wider geographical diversification of LDCs' exports but led also to a greater reliance on those highly priced commodities. LDCs remain particularly vulnerable to external shocks; the 2008-2009 global crisis and the bumpy transitional recovery that followed illustrate the fragility of the recent trends. A slowdown in the growth of large emerging countries may end the commodity "super-cycle", deepening LDCs' structural trade imbalances. In such a perspective, renewed efforts towards extensive product diversification are called for. Fostering diversification has been supported for many years by preferential market access to develop and --more recently-- to emerging countries. But preferences alone are not sufficient to improve the supply-side capabilities of most LDCs. The new business models related to global value chains offer new opportunities to LDCs for export diversification and trade facilitation is one of the key components of this diversification strategy.
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