Fourth assignment Aid for Trade at a glance

2009

AID FOR TRADE

The world economic situation

The world today is affected by a serious economic crisis. The global world economy has been
changed very badly with a shortage of global demand and financing support. Indeed, the world real
GDP will reduce by 2.75 %, the global FDI inflows in 2009 are predicted to fall more than 20 %
and the world exports will be likely to decline by 9 %. The remittance inflows to developing
countries will go down from 1 % to 6 % while the outflows of domestic saving in these countries
are estimated to increase considerably. As a result, there will be a negative long term impact on
developing countries which can interrupt their export performance, and their economic and social
development, including their poverty reduction.

What’s Aid for Trade?

Aid for Trade is a program that supports developing countries, especially the least developed
countries that need to overcome the obstacles in order to benefit from international trade and to
reduce the poverty. In fact, Aid for Trade will help developing countries to increase their exports,
to integrate into the global trade and to benefit from liberated trade and market access.

How can Aid for Trade achieve its goals?

Aid for Trade aims at assisting low income countries to combat structural limitations and weak
capacities that disrupt their ability to produce, compete and maximize the benefits from trade and
investment opportunities. Partner countries have the same priority for regional integration,
including transport infrastructure, trade facilitation, competitiveness, export diversification and
capacity for regional trade negotiation. Aid for Trade helps LDCs to build side capacity and trade-
related infrastructure in order to facilitate their access to markets and to increase their exports.

As a result, Aid for Trade has made remarkable progress. Developing countries are prioritizing
trade in their development strategies while donors are increasing their resources. To maximize the
benefits for regional economic growth and poverty reduction, it is would be to strengthen regional,
human and institutional capacity and improve equitable participation of developing countries in
regional initiatives. It is also important to continue cooperation between partner countries and
donors, international organization and regional institution to strengthen Aid for Trade initiatives
and help developing countries to have a more stable economic foundation and to exit the crisis.

How to make Aid for Trade sustainable

Seemingly, Aid for Trade becomes more and more important. To be success, Aid for Trade needs
4 priority areas. First, show that Aid for Trade is important to help developing countries to
integrate deeply into the global market. Second, show that Aid for Trade can attain the partner
countries’s goals in terms of economic development and poverty reduction. Third, identify the
targets which can overcome the constraints and allow benefiting from trade. Fourth, show that Aid
for Trade can hit the target by identifying how Aid for Trade will address the constraints, how it
will work and add value to, and how it will fit into the evolving framework of multilateral and
regional cooperation.

How Aid for Trade will help Cambodia?

Cambodia is a least developed country which is affected by the global economic crisis. The country
depends also on garments and remittances which are globally affected strongly by the crisis.

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Prepared by Kheang Praneth Supervisor: Sheila Scopis