The global trade slowdown in Asia and the Pacific, including the Philippines, can be toppled down through export diversification, a new report by the Asian Development Bank (ADB) said.
There is now a greater need for economic and export diversification, and well-targeted aid for trade to catalyze financing that enables sharing the benefits of open trade more equitably
In a report titled “Aid for Trade in Asia and the Pacific: Promoting Economic Diversification and Empowerment,” ADB said boosting industrial capacity, international competitiveness and transport infrastructure are the key solutions to the gradual weakening of trade cost globally.
“Trade costs are in gradual decline, but further progress can be made, particularly in the services trade vital to promoting economic diversification and empowerment for vulnerable groups,” the report said.
Global trade slowdown and the deteriorating commodity values are a major challenge for developing countries, specifically those with narrow industrial and private sector bases for generating jobs, diversifying exports and creating new sources of government revenue.
“Challenges to trade include the risk of sluggish global economic growth, the adoption of more inward-looking trade policies in some parts of the world, and widening social and income inequalities,” ADB Vice President for Knowledge Management and Sustainable Development Mr. Bambang Susantono said.
“There is now a greater need for economic and export diversification, and well-targeted aid for trade to catalyze financing that enables sharing the benefits of open trade more equitably,” he added.
The study reiterated that those economies with a few concentrated sectors must tackle issues linked to restricted industrial or manufacturing capacity, poor international competitiveness, and transport and network infrastructure challenges.
In Asia and the Pacific region, services account for 48.3 percent of the workforce (and 50.6 percent of the female workforce) and add an average of 53.4 percent to the national output of economies. Services sectors also account for more than a fifth of Asia and the Pacific’s total trade.
Meanwhile, in the Philippines, 58.5 percent of the total employed in April 2019 came from the services sector.
According to the report, the growth of services throughout Asia and the Pacific region, particularly in information and communications technology, is also a prospect for economic and export diversification.
Integrated and coherent policies, with increased trade liberalization and regulatory reform, pose significant contributions for services trade to grow, the report added.
On the other hand, aid for trade intended for digital connectivity increases economic opportunities by connecting businesses to markets that are beyond their reach.
Moreover, it also provides export avenues for business services, telecommunications, and information services aside from backing up e-commerce in the manufacturing area.
“Digital technologies and the rise in services have helped to boost entrepreneurship among women in recent years, lifting economic growth. However, more efforts are needed to bring down the barriers that make it difficult for women and other vulnerable groups to reach international markets and integrate into global supply chains,” the ADB report explained.