Eric Postel is the Assistant Administrator of the Bureau for Economic Growth, Agriculture and Trade.
This week, donors and partner governments from around the world are gathering at the World Trade Organization in Geneva for the Third Global Review of Aid for Trade. This session is devoted to examining an important adjunct to trade liberalization, Aid for Trade, which is focused on helping developing countries benefit from fuller integration into global markets. In particular, the Review is focused on showing the results of trade-related assistance. It also offers an opportunity to bring together both trade practitioners and development professionals to advance the Aid for Trade initiative.
Aid for Trade, or Trade Capacity Building (TCB), is one of the most successful – and cost-effective – ways of helping entrepreneurs and small farmers in developing countries. TCB streamlines the process of importing and exporting goods and products, linking entrepreneurs and farmers to global markets.
The U.S. government promotes trade and investment through a range of programs. USAID’s TCB database details the scope of TCB projects implemented by all U.S. government entities. Our TCB assistance is not limited to the fastest-growing economies. In 2010, bilateral U.S. government TCB activities targeted 38 Least Developed Countries – 46 percent of all U.S. Aid for Trade.
As the leader of the U.S. delegation to Geneva, I had the opportunity to speak today on a WTO panel and to promote the U.S. government’s approach to TCB, as well as our lessons learned and best practices. USAID is uniquely positioned to offer insights to our partner countries and other donors due to our recently conducted evaluation, From Aid to Trade: Delivering Results (PDF, 2.8MB).
The evaluation consisted of a three-phase, cross-country evaluation of U.S. government TCB, with a special focus on TCB interventions implemented by USAID. A summary of the evaluation (PDF, 440KB) is available, as well as a fact sheet (PDF, 246KB) highlighting the main findings of the evaluation.
Several important lessons emerged from the evaluation.
Critically at a time of scarce resources, the evaluation proved that TCB promotes sustainable development by increasing competiveness and facilitating regional and international trade so that countries can move toward self-sufficient economic growth. The results are clear: each additional dollar invested by USAID in TCB programs is associated with a $42 increase (PDF, 246 KB) in the value of developing country exports two years later.
TCB projects help increase the profits earned by Micro/Small/Medium Enterprises, women and the poor by helping them gain market access for the goods and services they offer or, simply put, helping them sell their products in the global market. Access to new regional and global markets helps generate better profits and therefore reinforces broader poverty reduction efforts among these target groups. The evaluation also found that TCB projects with an explicit focus on women or the poor performed better than the average.
These sessions in Geneva have offered an important dialogue on Aid for Trade. One of the strongest messages coming from all sides is that this is a long-term effort that can continue to yield great benefits as a cost-effective development tool.