Open markets not enough to bridge gap between rich and poor

Associated Press, Vienna

Trade and investment alone won't bring economic development to poor countries, the UN Industrial Development Organization (UNIDO) said in a report released Tuesday.

Instead, developing countries need connections that let them use and learn from technology used in richer countries, the report said. It noted that poor countries don't have a surplus of export goods, or the capacity to produce them, to take advantage of most new trade opportunities.

"Only a major concerted effort by the international community to remove obstacles to market access and support developing countries' capacity building to conform with the (industrialized countries') rules can redress inter-country disparities," UNIDO said in a news release introducing its Industrial Development Report. UNIDO has its headquarters in Vienna.

In New York, UN spokesman Fred Eckhard said the report "shows the wide gap that still exists in levels of industrial development worldwide."

To promote development, poor countries need to develop national strategies, while the international community needs to create an agenda to guide rich countries and international agencies that are trying to diminish the gap between rich and poor, the report said.

The report included an index that ranks countries by their ability to produce and export manufactured goods that are competitive.

Singapore topped the list, followed by Switzerland, Ireland, Japan and Germany. The United States was ranked sixth, a slight drop as compared to 1985, when the country had the fifth-highest index.

The index is constructed from four indicators: manufactured value added per capita, manufactured exports per capita and the shares of medium- and high-tech products in the manufacturing value added and manufactured exports categories.

Singapore held the sixth position in 1985, while Ireland climbed to its third position from No. 15.

Most developing countries continued to languish at the bottom of the index, while middle-income developing countries such as China, Costa Rica, Malaysia, Mexico, the Philippines and Thailand had made major improvements in the fields of performance and capability, the report said.

China advanced to position from 51 to 37; Costa Rica from 44 to 36, Malaysia from 30 to 22, Mexico from 28 to 23, the Philippines from 45 to 25 and Thailand from 43 to 32.

"The key challenge facing developing countries is how to meet intense global competitive pressures and to step into the sphere of competing through innovation and learning, avoiding the 'low road' of reducing wages, depreciating exchange rates and disregarding labor standards and environmental regulations," the report said.

It recommended that poor countries "develop capabilities and increase productivity growth through concerted innovation and learning."