Trade Policy at Work

The Neglected Imperative in Trade and Development: Innovation as a Growth Strategy for the Global South

CUTS International and the Organisation Internationale de la Francophonie organised this session that examined the relationship between innovation and trade in developing and least-developed countries, with an emphasis on Francophone nations.

“While innovation exists in developing and least developing countries, its diffusion in a commercially-viable form has been lacking. This is where the potential of trade as a powerful information catalyser should be harnessed”, said Pradeep S Mehta, Secretary-General of CUTS International in Geneva while introducing the event.

“We know the positive effects of trade liberalisation and openness, but we are not able to reap them. What is fundamental is harmonisation of trade policies with other national policies, enabling innovation capacities to develop”, remarked Dominique Forey, Professor at Ecole Polytechnique Fédérale de Lausanne. According to him, innovation is a part of a structural change that national policies need to accompany. This includes building the “self-discovering” capacity of entrepreneurs, enabling innovation, diversification and spillover effects, while encouraging what he called “smart specialisation”.

The example of industrial policy in Mauritius as cited by Ambassador Baboo Shree Servansing is actually a case in point of “smart specialisation”. By reinventing and diversifying sugar production from raw sugar to sugar cane cluster industries, Mauritius successfully took advantage of trade, including through Aid for Trade.

According to Pierre Claver Ndayiragije, ambassador of Burundi, and Professeur Desiré Avom, Professor at the University of Yaoundé there is too little innovation in Africa, explaining its disappointing level of growth, partly due to the inflation of raw material prices. LDCs remain marginalised in world trade because they have limited exposure to traditional channels of innovations (i.e. FDIs) and a weak ability to absorb and take advantage of those foreign innovations. At political level, technology policies and action plans are frequently missing, as well as resources. Brain drain, lack of infrastructure and public goods are also impeding innovation.

Asad Naqvi of United Nations Environment Programme emphasised the relationship between innovation and green growth, noting that the poorer people are the more they create value from nature. He recommended that LDCs and emerging countries should not disregard innovation, and more specifically for people that are at the bottom of the ladder. His key message is that there is no chance of innovation to happen if there is no relevant policy choice upstream.

The concept of innovation has long been associated with high technology and Silicon Valley, leaving out of the limelight other aspects of significant potential for development in some countries. Yet, the success story of Mauritius is not isolated, as can be seen from certain farming techniques under ‘Green Revolution’ in some developing countries or from the breakthroughs of the Kenyan model of mobile payment systems which are being replicated in many countries.