International Support Measures for LDCs under scrutiny

In a Committee for Development Policy (CDP) Background paper, Cortez, Kinniburgh and Mollerus analyze several International Support Measures (ISMs) from an LDC perspective through the review of five case studies. The paper focuses on how the Least Developed Countries (LDCs) received support, and the challenges they faced accessing ISMs. Five combinations of countries and ISMs were researched: (1) Preferential market access and Bangladesh, (2) World Trade Organization (WTO) accession support and Nepal, (3) Special and Different Treatment, Enhanced Integrated Framework (EIF) and the Gambia, (4) the Least Developed Countries Fund and Mozambique, and (5) Smooth Transition Measures and Cape Verde.

The analysis of these particular ISMs  confirms existing understandings and provides additional insights into them. Specifically, the study shows that Development Assistance (ODA) is the most common, widely-used and flexible ISM for most LDCs. The runner-up is preferential market access, although this ISM seems to have had limited success in diversifying exports. To make export diversification possible, the analysis shows that the market access schemes should be reviewed. In addition, supporting national policies and the existence of an initial productive capacity within the country are also essential. To tackle some of these issues, Aid for Trade and the EIF designed solely for LDCs can help. The EIF and related exercises such as the Diagnostic Trade Integration Study (DTIS) have drawn governments’ attention to the importance of integrating trade into countries’ development strategies. And yet, several challenges still hinder the EIF effectiveness. For example, the oft-underestimated amount of funds required to construct the action matrix, as well as the time lapses between its drafting and its implementation, poses quite a problem. The lack of donor resources may amplify the challenges faced.

The study concludes that two general conditions have an important impact on the effectiveness of ISMs. Firstly, LDCs need to have a well-designed development strategy in place and should focus on accessing ISMs based on this plan. In other words, the use of ISMs should be demand-driven. Secondly, development partners should adjust their contributions to the development strategies of LDCs, provide sufficient resources, and better coordinate among themselves. Development partners should also make sure that their LDC affecting policies are in line with the LDCs’ development strategies.