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The Expansion of Processing in Developing Countries and International Policy Requirements

image of The Expansion of Processing in Developing Countries and International Policy Requirements

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Constraints to the Expansion of Processing and Their Importance e.g. Tariff Escalation, Technology, Scale, Existing Capacity in Developed Countries, Finance, Political Risks etc.

Developing countries face a number of constraints to an expansion of domestic raw material processing facilities, whether for export or local markets. A recent UNCTAD study (1) lists the major obstacles to downstream processing as follows: tariffs and non-tariff trade barriers, the restrictive practices of vertically integrated companies, difficulties in competing with established brands, shortage of capital, lack of technology and skilled manpower, high transport and energy costs, lack of proximity to consumer markets, inadequate infrastructure, lack of necessary complementary materials, unsuitable climate and so on. However, not all these obstacles are specific to processing industries, and indeed, inadequate infrastructure confronts LDCs in all spheres of development.

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