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Development Account Projects

Addressing the impact and implications of the global financial crisis on developing countries through support to services sector development

Background:

Services are the new frontier for enhancing trade, productivity and competitiveness. Global demand for services increased dramatically, turning services into engines for growth, development and poverty eradication in developing countries. Services have key linkages with Millennium Development Goals; through employment they can help to alleviate poverty and many services are essential for human life or infrastructural needs (e.g., telecom, health, education, provision of energy/water). Hence Governments face the challenge that efficient services are provided, including to the poor.

However, many developing countries are yet to fully exploit services for development. Positively integrating developing countries, especially least developed countries, into the global services economy and increasing their participation in services trade, remains a challenge. Developing countries face particular challenges when seeking to create enabling environments for pro-poor services sector development and achieving Millennium Development Goals. They lack, for example, needed institutional, financial and human resources; pacing and sequencing of services reforms; and services data. Better understanding of regulatory policies and their interaction with domestic policy objectives and trade-liberalization can support policymakers in improving policy outcomes and in designing services strategies. Policy and regulatory failures in key services sectors, including the global financial crisis, have underlined the need to rethink the policy, regulatory and institutional framework for key services sectors.

UNCTAD has a track record in analysing the services sectors of countries as well as their contribution to development and attendant regulatory, policy and institutional frameworks. The Accra Accord suggests that developing countries build regulatory frameworks and institutions to develop competitive services sectors and that particular attention is given to the universal access to essential services. It calls upon UNCTAD to assist developing countries, in increasing participation in global services production/trade, by strengthening the services capacity, efficiency and competitiveness of developing countries and establishing regulatory/institutional frameworks. UNCTAD should support national services assessments and policy reviews, examine issues related to services trade liberalization and its development impact and strengthen data and statistics. Services policy review includes: factfinding and multi-stakeholder meetings at the national level; the UNCTAD meeting with experts and stakeholders at the international level; analytical/research work; publication and dissemination of services policy reviews aimed at awareness-raising, consensus-building and enhanced developing country participation in services production and trade. UNCTAD will implement this project with relevant partners at the international, regional and national levels.

Objective:

To strengthen the capacity of policymakers, regulators, and trade negotiators of developing countries to address services-related challenges in an informed manner to better harness the development benefits of the services sector and of international trade in services.

Expected accomplishments:

  • A more systematic and comprehensive picture of countries' services sectors and its development implication
  • Enhanced capacity of regulators, policymakers and trade negotiators at the national and regional levels enabling them to make informed decisions and harness the sector's development benefits
  • Contribution to adequate pacing and sequencing of national policies, reform and liberalization

Implementation status:

In 2012, the project continued to contribute to strengthening the expertise of trade officials in beneficiary countries and to the awareness-raising of various policy-makers, regulators and other stakeholders on issues related to services sector development and services trade liberalization in Lesotho, Nicaragua, Peru, Rwanda, and Uganda. This was done mainly through the introduction of the Services Policy Review (SPR) methodology and the holding of national stakeholder workshops which also served to strengthen multi-stakeholder consultations and promote consensus-building in policy-making. A study tour to South Africa was organized for Lesotho with the aim of assisting its officials in identifying concrete approaches for the implementation of the recommendations of the SPR report.

SPR reports were finalized for two countries (Lesotho and Rwanda) while SPRs were initiated for 3 other countries (Nicaragua, Peru and Uganda). For these 3 countries UNCTAD drafted a preliminary desk study on their national services economy, providing beneficiary countries with a comprehensive overview of the broad services sector as well as an assessment of the policy, regulatory and institutional frameworks of identified priority services sectors. The desk study also analyzed the participation of foreign services providers in the sector and the trade liberalization commitments affecting these sectors.

The project also contributed to improving the technical knowledge of national and regional consultants in undertaking comprehensive analytical and research work which will produce clear policy recommendations for governments in the services sector through the SPR methodology to undertake the in-depth (legal and economic) analysis of sector specific policies at the local level.