In this paper, we have discussed potential gains to the LDCs from improved market access in the QUAD. In principle, the economic benefits of extending the LDC trade preferences can be divided into three components: (1) the value of higher prices on existing production and exports; (2) the value-added from expanding production; and (3) the benefits created for (or diverted from) consumers in LDCs. Based on measures of the gains that approximate the theoretical measures, we conclude that the aggregate benefits of duty-free and quota-free access for the LDCs are likely to be modest, even compared to their present low levels of income. The main reasons are (1) that most LDCs presently enjoy quite liberal market access in important export markets, and (2) that the ability of LDCs to take advantage of trade preferences is limited, due to constraints on supply capacity and restrictive requirements for rules of origin. Moreover, their gains could be eroded either by further multilateral tariff liberalisation in the context of the WTO or by unilateral policy changes in the QUAD in the event that LDC exporters capture significant market shares from domestic producers.

Ottar Mæstad

Research Professor / Special Adviser, Director Development Learning Lab

Market access for LDCs

Jan 2001 - Dec 2002

Recent CMI publications: