Chile

For many developing states which have experienced a substantial decline in their share of world trade and global value added Aid for Trade (AFT) initiatives have become a critical source of support in a context where these countries suffer from both market and government failure. As such the key issue is whether AFT programmes as currently configured are the right policy instrument or set of instruments to address the weak participation of developing countries in global trade and global value chains. In many regards the problem relates to an overdependence on a narrow range of exports (e.g. agricultural and resource-based commodities and low value-added manufacturing goods and services) that are faced with declining terms of trade tariff progressivity and diminishing economic returns (Reinert 2007). One of the key criticisms that has emerged is that the focus of AFT donors and relevant implementing agencies has been heavily weighted on the architecture of trade support programmes and not sufficiently on industrial upgrading and enterprise development (Cirera 2009).