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Marginalisation of LDCs and Small Vulnerable States in World Trade

image of Marginalisation of LDCs and Small Vulnerable States in World Trade

There are indisputable concerns over the ineffective participation of LeastDeveloped Countries (LDCs) and Small Vulnerable Economies (SVEs) in the process of global integration, and their failure to derive benefits from the ongoing process of trade liberalisation and globalisation. This paper explains the theme of 'marginalisation' of LDCs and SVEs in the international trade arena, and their declining relative importance in world trade. Statistical analysis is used to determine the longterm declining share of LDCs and SVEs in world merchandise exports. The study argues that the process of marginalisation of these countries is mostly the result of the failure of LDCs and SVEs to diversify from their static comparative advantage related to the production of primary products, the significance of which in world trade has declined considerably during the past decades. The analysis emphasises the need for diversification of exports and an expansion of the manufacturing export base in these countries.

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Introduction

Despite increasing global integration in terms of an unprecedented rise in the volume of trade and capital flows and a significant reduction in barriers to international trade, there are indisputable concerns that some countries have failed to derive benefits from the ongoing process of trade liberalisation and globalisation. This proposition is usually made with reference to the least developed countries and small vulnerable states. It is now becoming increasingly evident that even in this era of globalisation, these countries have not been able to participate effectively in global trade and commercial activities, and that consequently they have failed to prevent their declining relative importance in world trade.

English

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