Government Business Relations of WTO and OECD - Coursework Example

Government Business Relations Introduction International organisations such as WTO and OECD can be considered as part of the powerful engine that drive economic growth and reduction of poverty. Nevertheless, the facets that denote these facts are indispensable in determining achievement of these objectives. For instance, such organisations fail to help the least developed countries (LDCs) in achieving the underlined objectives due to different challenging circumstances prevailing in these countries. The principle factors that determine achievement of economic development in the (LDCs) includes capacity level, procedures, institutions, policies and infrastructure, which determine integration of the countries with the global market. In the bid to facilitate development even in areas where the above factors seems to be inadequate, organisations such as WTO have devised mechanisms of better aid and trade. Some of the recommendations made include strengthening both the demand side and the donor side. Rationale for the international institutions in helping the developing nations achieve economic development The international institutions offer aid for trade to developing nations in order to help them overcome structural and capacity limitations that act as barriers to maximization of the benefits accrued from trade opportunities. In summary, aid for trade has been cited to be about helping the developing countries to increase their export and import activities and increase market accessibility. Funds obtained from aid for trade has been used for many years in assisting the developing countries facilitate trade related programmes. Since economic development entails different issues that go beyond exchange of goods and services, the aid for trade is used to cover the broad aspect of development including strategies of poverty reduction and capacity building. The following are some of the ways through which the international organisations help the LDCs in economic development: Technical trade-related assistance This relates to helping these countries develop trade strategies, act as mediator for trade agreements, and help in implementing these agreements. Due to lack of capacity, many LDCs fail to develop their trade strategies thus low economic development. As Sayanak (2008) pointed out, that lack of proper trade policies in some of these countries highly contribute to lack of proper trade strategies. In essence, laws that relate to imports and exports are not well articulated and this ends up affecting trade between these countries and their trade partners. Trade-related infrastructure assistance The international institutions help the LDCs in developing their infrastructure. Schabbel (2007) argued that in order to have economic development, governments must devise mechanisms that support infrastructure. These are the focal point for development projects including trade and other determinants of development. For instance, poor roads have been cited to highly contribute to low movement of goods from one point to another. Most LDCs have good agricultural produce, but lack of good roads and this has been seen to hinder trading of these farm produce. In most cases, such goods end up being spoilt thus low returns to the farmers. When this happens, the government is not able to get tax from such goods. International institutions such as WTO help such countries in constructions of roads, ports as well as telecommunication in the bid to help in connecting the domestic market with the global economy. Productive capacity building In order to have quality goods for export, it is indispensable to have industries that help in processing these goods. For instance, many raw materials that need to be exported require proper packaging in order to prevent damage and for effective transportation. Some perishable goods need proper care and handling thus the need to have the necessary processing and transportation facilities. In this regard, the international institutions help in providing support to industries in order to build comparative advantages that support diversity of exports. International institutions as hinderers of economic development in developing countries Mourmouras (2006) argued that the bottom line to the international institutions as hinderers of economic development in developing countries is the inability by these countries to have any influence within the international institutions. It is argued that although developing countries contribute to three quarters of the international institutions, by theory, it is presumed that they have the capacity of influencing agendas and outcomes related to trade negotiations. However, these countries fail to utilize this theory to their advantage. Economies of most of the developing countries are in one way or another dependent of the U.S or EU in regard to their imports, exports and aid. In this regard, any effort by the international institutions to intervene in matters related to trade and development is viewed by these countries as obstruction of consensus between these countries and their dependant partners. International institutions policies involves the principle of reciprocity or trade-offs. For instance, when one country gives a concession in a given area like lowering tariffs for a given product, it is expected that another country should accede to the tariffs. However, Jackson (1997) argued that this kind of battering is only entitled to large and diversified economies. The rationale behind the argument is that large economies can get more by giving more. Therefore, bringing in such agreements to developing countries can only be a burden to them since they cannot afford to put up with the agreements. In another dimension, some of the strategies put in place by the international institutions require human and technical resources that most of the developing countries lack. For instance, the international institutions may require that their members attend meeting in deliberations of their development strategies. Attending meetings in places such as Geneva every week can be expensive and economically unviable for the developing countries. It is an expensive affair and can end up negatively contributing to the development agenda. In this regard, it means that since they are unable to attend all meetings planned by the international institutions, they only enter into negotiations less prepared. Therefore, implementation of the development strategies outlined becomes difficult. International institutions call for recourse in dispute settlement systems. However, some developing countries may lack the legal expertise for the execution of the recourse. In light of this, these countries continue violating free trade rules, which consequently lead to trade disagreements. In fact, (Carlsnaes, 2012)noted that some of these countries do not consider these recourses as part of their development needs thus continue to lug behind in terms if economic development. Kerr (2007) argued that the international institutions such as WTO fail in their agenda of helping the developing countries because they act under the influence of the U.S. The urge by the U.S to expand its own markets has highly dictated on the development of the international institution policies. The inequalities with the international institutions have characterized the failure by the institutions in helping the developing countries. For instance, Kerr (2007) noted that exports from developing countries continue to face market access impediments even in the presence of the international institutions and agreements. A recent UN study documented that tariff peaks and tariff escalations characterizes the inequalities that face the developing countries and acts as obstacles to the developing countries export bids. It is also argued that the international institutions have failed to build a level play field for both the developed and developing countries. In order to gain markets to developing countries, the developed countries influence the international institutions in devising new agreements in areas such as telecommunications, IT and financial services, which tends to favor the developed countries while they become unfavorable for the developing countries. Rules and policies imposed by developed nations have made the work of international institutions difficult. For instance, the U.S has introduced its own rules that dictate on where some of its products especially on textile and agricultural produce come from. Such conditions affect competition due to restrictions imposed. An example of such policies is the WTO’s “green Box” policies, which exempts U.S agro-exporters from reductions. The argument behind this is that they are non-trade distorting. Most of the international institution agricultural policies, although they help in promoting food availability, limit the developing countries in having food self-sufficiency. This is true because the developing countries are short of foreign exchange thus are not able to buy foods from the outside market, despite the availability and low prices. Conclusion International organisations are powerful engines that drive economic growth and reduction of poverty. The institutions offer aid for trade to developing nations in order to help them overcome structural and capacity limitations that act as barriers to maximization of the benefits accrued from trade opportunities. The institutions help the developing countries in developing trade strategies, act as mediator for trade agreements, and help in implementing these agreements. They also help in developing infrastructure and providing support to industries in order to build comparative advantages that support diversity of exports. However, these strategies and objectives of the international institutions may fail due to many factors. In fact, it has been argued that these institutions act as hinders of development in the developing countries, contrary to their official mandate. International institutions policies involves the principle of reciprocity or trade-offs, but this kind of battering is only entitled to large and diversified economies. Some of the policies designed by the international institutions require human and technical resources that most of the developing countries lack. 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