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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.

English

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Executive Summary

Despite increasing global integration and an unprecedented rise in the volume of trade and capital flows, together with a significant reduction in barriers to worldwide trading activities, there are indisputable concerns that least developed countries (LDCs) and small vulnerable states (SVSs) have failed to derive much benefit from the ongoing process of trade liberalisation and globalisation. The declining relative importance of these countries in global economic activity bears testimony to these concerns and can be more effectively described as ‘marginalisation’ in world trade.

English

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