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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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Marginalisation in Merchandise Export Trade: A Statistical Analysis

The manufacturing export base in most LDCs and small states is rudimentary in nature and most of these countries have to rely overwhelmingly on agricultural commodities and natural resource intensive products for their exports. As can be seen from Figure 4.1, in 25 LDCs, out of a total of 33 for which information is available, primary exports contribute to more than 50 per cent of the receipts from merchandise exports. Only in the cases of Madagascar, Sierra Leone, Haiti, Nepal and Bangladesh do manufacturing exports dominate the export basket.

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