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New UNCTAD Index Measures Trade, Development


A new report by the U.N. Conference On Trade And Development, UNCTAD, ranks 110 countries according to their trade and development performance. The new Trade and Development Index looks at ways in which economic, social and political factors affect a country's trade and human development.

The traditional view finds that countries can create jobs and raise the living standards of their citizens by expanding their foreign trade. UNCTAD's new Trade and Development Index argues trade is not an end in itself, but a key influence of human development.

In arriving at its rankings, the index uses a number of factors to determine a country's trade and development performance. These include variables such as per-capita health and educational expenditure, physical infrastructure, average trade tariffs, literacy and life expectancy.

But UNCTAD Secretary-General, Supachai Panitchpakdi, says the index shows that openness of trade is the most significant factor in explaining the Trade and Development score of all countries.

"It also shows that countries with high scores have done uniformly well in all the components of the index," he said. "While countries with low rankings display substantial variations in the scores of individual components. This points to the need for a more balanced approach to development strategies."

The index ranks Denmark as the world's most successful "trade and development nation," followed by the United States and the United Kingdom. At number 15, Singapore is the only developing country among the top 20.

Despite years of high economic and trade growth, China is ranked 51st and India comes in at number 90. The 10 lowest ranked nations are from Africa and include nine of the least developed countries. South Africa and Mauritius are the only African countries in the top 50, ranked 41st and 47th respectively.

Lawrence Klein is the 1980 Nobel Laureate in Economic Sciences. He notes that the usual way of measuring trade and development is by looking at a country's gross domestic product. He says he likes the approach taken by the index much better.

"When we say a country is doing well or a country is growing fast, we say it must have a high Gross World Product," he explained. "But, now we have more dimensions. It is a better way of looking at the world from an economic point of view. And, one would say from an economic, social and political point of view."

Professor Klein says he also likes the index because it is flexible. It allows countries to incorporate dramatic world events as they are happening to gauge their affects on trade and development. For example, he says if an avian influenza pandemic materialized, this could be introduced as a special factor into the study.

The study concludes that poorer countries can gain most from increased market access if they invest in more education, health services, road building, banking and better governance.