Significant progress had been made in securing additional financial resources for the Aid for Trade initiative for developing countries, but sustaining financing flows in the continued tight fiscal environment would be challenging, World Trade Organisation (WTO) director-general Pascal Lamy has said.

The initiative had mobilised over $200-billion in funding since its launch in 2005, with some $60-billion directed to least-developed countries (LDCs), he said during an address to the Organisation for Economic Cooperation and Development (OECD) Dialogue on Aid for Trade this week.

Growth in funding to LDCs had outstripped the 80% rise in the total funding envelope, while funding to all regions increased, with Africa posting a 180% increase in real terms and other regions not far behind. 

The WTO-led initiative encouraged developing country governments and donors to recognise the role trade could play in development and, in particular, sought to mobilise resources to deal with the trade-related constraints identified by developing countries and LDCs.

However, he warned that the funding outlook for development assistance was muted.

“As part of their Multiyear Action Plan on Development, G20 [Group of 20] leaders have committed to maintain Aid for Trade expenditure at 2006 to 2008 levels.

“Notwithstanding this pledge, we need to make the case for continued Aid for Trade funding and, central to this task, is to highlight the tangible results achieved on the ground,” Lamy said.

He added that improving the trade capacity of developing economies was of global interest, with a growing number of South–South partnerships attesting to this.

“On a conservative basis, the average import content of exports has grown in recent decades from 20% to 40% and much more for export-oriented emerging countries. Put simply, in today’s economy, you need to import in order to export,” he said.

Lamy added that recent global trade expansion suggested that developing countries were gaining a foothold in the complex production sharing networks that underpinned the global economy.

Annualised over the period 2005 to 2011, the volume of world merchandise trade grew by some 3.7% a year.