Globalization

Bureaucracy stifles developing nations exports

Tim Harford wrote an OpEd in today’s New York Times about the myriad of “self-imposed” export bureaucracy that most developing nations still have in place. The context and timing is related to this week’s Hong Kong WTO meetings where the rich nations are unwilling to move forward in reducing agricultural sudsidies which hurt exports of developing nations.

He explains that even if 100% of agricultural subsidies were eliminated, there would be still huge barriers for third world farmers to get their crops to export markets. In Central African Republic, it takes 116 days and 38 signatures for bananas to get to ships for export! On average, sub-Saharan Africa exporters face delays of nearly 50 days for each shipment and require some 20 signatures on at least 8 separate custom forms. (Source: Doing Business in 2006: Creating Jobs publication of the World Bank.) Can you think of a better situation for encouraging a culture of corruption?

An exporter in India requires 22 signatures on 10 documents placing India in the bottom 20 countries in the world for entrepreneurs wanting to export. Brazilian exporters require 39 days to get their produce onto a ship which means that some agricultural products are just not feasible to export.

In comparison, China can get exports moving in 20 days, the USA in 9 days and Denmark in 5 days.

Tim Harford is a columnist for The Financial Times and author of The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor.

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