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World Bank urges developing countries to invest more in trade logistics

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World Bank urges developing countries to invest more in trade logistics

15th January 2010

By: Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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Developing countries could improve their chances of emerging from the financial crisis in a stronger and more competitive position by investing in better trade logistics, World Bank vice-president for poverty reduction and economic management Otaviano Canuto said on Friday.

World Bank president Robert Zoellick agreed that developing countries should focus their growth strategies on more efficient trade logistics, as this offers manufacturers, farmers and consumers "tremendous" growth and investment opportunities.

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A new report released by the bank ‘Connecting to Compete 2010: Trade Logistics in the Global Economy' highlighted that, globally, the capacity of countries to efficiently move goods and to connect manufacturers and consumers with international markets were improving.

However, more had to be done to improve efficient trade logistics, as this could lead to faster economic growth and could assist companies in benefiting from a trade recovery, the researchers highlighted.

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The research showed that low-income and middle-income economies could boost trade by about 15% by improving their trade logistics performance.

"Economic competitiveness is relentlessly driving countries to strengthen performance, and improving trade logistics is a smart way to deliver more efficiencies, lower costs and added economic growth," Zoellick said.

Germany was the global top performer in the Logistics Performance Indicators (LPI) survey, which formed part of the report, with South Africa ranking 28th out of the 155 economies listed in the LPI.

While a substantial logistics gap between rich countries and developing countries remained, developing countries have improved their capacity to connect to international markets since the last LPI survey was conducted in 2007, the researchers pointed out.

Positive trends have also been seen in terms of the modernisation of customs, the use of information technology and the development of private logistics services.

The report also found that many countries performed better than what their income levels could suggest, with South Africa being one of the top ten most significant over performers.

South Africa was also the top performer in Africa, while China led the pack in East Asia and India performed the best in South Asia.

Meanwhile, the researchers pointed out that many countries, particularly low-income countries, should implement border manager reforms.

Improved transport policies, increased competition in trade-related services and improved trade-related infrastructure were other areas that could benefit many countries, the report stated.

Low-income economies' trade logistics were most often hampered by logistics services, while the trade infrastructure was the largest obstacle in middle-income countries.

 

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