Download Non-Agricultural Trade and Poverty Reduction

Non-Agricultural Trade and Poverty
Reduction: Nepalese Experience
Pushkar Bajracharya
Introduction
Types
 Domestic
 International
 Entrepot
Auxiliary to trade
 Infrastructure
 Services
Why trade occurs
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Absolute advantage
Comparative advantage
Resource endowment
Importance
Generates benefit to all those who participate
in trade
 Promotes economic activities
 Generates employment opportunities
 Contributes to growth
 Reduces poverty
e.g. Japan, Korea, Taiwan, Singapore, Hong
Kong, China, SE Asia

Major exports of Nepal in 2004/05
Rs 10 m.
Overseas
Garment
Carpet
Pashmina
Handicrafts
Rs 587
Rs 612
Rs 104
Rs 101
Major exports of Nepal in 2004/05
India
 Jute goods
 Chou chou
 Toothpaste
 Polyster yarn
 Veg. ghee
 Thread
 Plastic goods
 Corrugated sheet
 Textile
 Juice and chemicals
Rs 270
37
128
190
464
164
136
307
300
250
Evidences in Poverty Reduction
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Research show 83% of poverty reduced by
growth
Trade a major contributor to growth
Role in Poverty Reduction
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Have generated employment opportunities to
almost 500,000 people ( direct and indirect )
in export oriented industries alone
Informal sector is estimated to generate
some 2 million employment now ( 1.6 million
in !998/99 ) of which trading is the main
activity
Role in Poverty Reduction
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Trade promotes auxiliary activities e.g.
transportation, communication, tourism,
support services,
Trade also encourages production activities
Overall impact is on poverty reduction
Evidences in Poverty Reduction in
Nepal
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Poverty reduction by 3% points in between
1992-1996 mainly contributed by trade
Poverty reduction strategies mainly
encompassing micro and small enterprises
as by PAF, MEDEP that relate to trading or
manufacturing for trading
Evidences in Poverty Reduction
products and services
CARPET
 Generated more than 300,000 employment
through spinning, carding, weaving, finishing,
washing, and trading
 More than 150,000 households benefitted
 Even now some 60,000 people getting jobs
 Backward linkage would have substantially
contributed to generate more jobs
Evidences in Poverty Reduction
products and services
Garment
 Generated up to 80,000 jobs at its peak with
local employment for 60%
 Current employment for 5000 only
 Non-export opportunities still significant
Evidences in Poverty Reduction
products and services
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Pashmina
Generated up to 100,000 employment
Significant reduction now
Evidences in Poverty Reduction
products and services
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Micro enterprises
Generated 1 employment with an investment
of Rs 10,000
In small with rs 250,000 and large 1 to 2
million
Cautions
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Trade in isolation not possible
Trade cannot substitute production
International market highly volatile
Domestic cushion essential
Must have a mechanism of standardisation and
monitoring
Tariff and non-tariff barriers major issues
Advantages to LDCs limited
Cost, quality, margins, delivery, imposition of
conditions deterrents
Strategies
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Promote linkages
Tap outsourcing
Develop institutions like export houses to promote
micro and small activities
Enhance monitoring
Fight for LDCs
Fight for making global trading system more
equitable
Make environment conducive
Conclusion
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Balanced reporting and presentation needed
Overall impact assessment and
consideration needed
Trade really an important cog in development
particularly for a country like Nepal with small
market.
THANKS