International Trade as an Engine for Sustainable Development: The ITFC Experience in Supporting SMEs
| Author | Anisse Terai |
| Published date | 01 September 2017 |
| Date | 01 September 2017 |
| DOI | http://doi.org/10.1111/1758-5899.12478 |
International Trade as an Engine for
Sustainable Development: The ITFC Experience
in Supporting SMEs
Anisse Terai
ITFC, Islamic Development Bank Group
Abstract
This article seeks to shed some light on financing and supporting international trade with a particular focus on SMEs. The
paper will look into the situation of Organisation of Islamic Cooperation (OIC) countries vis-
a-vis international trade. Then, the
role of multilateral development banks (MDBs) in supporting international trade will be expounded, while the following sec-
tion will focus on the experience of ITFC as the sole MDB fully dedicated to trade. Afterwards, the article will cover SMEs’state
in today’s world, and make the case of SME development through trade. Finally, a proposal for an innovative trade fund for
SMEs will be put forward. The article will conclude with recommendations and proposals to reinforce and develop SMEs
through trade for sustainable global social and economic prosperity.
For centuries, international trade has been a key driver of
global economic growth. The past decades have been
marked by an unprecedented and substantial expansion of
international trade, rising from US$5 trillion in 1994 to about
US$24 trillion today. This significant progress greatly bene-
fited Asia and the Middle East. According to the World Trade
Organization (WTO), the period 2005 and 2015 saw the share
of Middle Eastern exports in the world increase from 3% to
4% amounting to US$1.5 trillion, while that of Asian exports
increased from 25% to 30% amounting to US$5.5 trillion.
Lately, one of the leading trends in the international trade
landscape has been the growth of south-south trade or trade
within developing and emerging-market regions that does
not involve highly industrialised economies (United Nations
Conference on Trade and Development, 2012). Nowadays,
more than ever, international trade has become a powerful
means to achieve the sustainable development agenda.
In May 2017, on the occasion of its forum on financing
for development follow-up, the United Nations Economic
and Social Council (UNESC) reaffirmed that international
trade is an engine for inclusive economic growth and pov-
erty reduction and that it can contribute to the promotion
of sustainable development (United Nations Economic and
Social Council, 2017). This strong statement implies the
recognition of international trade as an integral component
of the development toolkit among development practition-
ers. However, despite the importance of international trade
to global growth and the furthering of the sustainable
development agenda, there are now increasing signs of
uncertainties over the commitment of major economies to
trade suggesting that international trade may be on the
wane. We have witnessed a new wave of protectionism in
the United States, the United Kingdom has chosen Brexit,
and there are increasing geopolitical tensions in the world.
Yet, increasing international trade can provide the answers
to global socioeconomic challenges and contribute in build-
ing a more peaceful and prosperous world.
OIC countries and international trade
The challenging environment of the global economy,
brought about by a succession of important shocks such as
the 2007–08 global financial crisis and the Arab Spring, have
had important effects on OIC member countries (Interna-
tional Monetary Fund, 2008). These effects vary from one
country to another, as some are heavily dependent on oil
and commodities export revenues, while others have more
diversified economies. The commodities cycle, which until a
couple of years ago fuelled growth in some countries, has
now turned down, leaving many economies struggling to
rein in widening budgetary and current account deficits.
Any hope for continued growth now heavily relies on struc-
tural economic reforms for diversification and fiscal sustain-
ability. Between 1997 and 2013, the share of total exports
and imports in OIC member countries’GDP went from 40%
to 60% as the volume of international trade grew at an
annual average rate of 5.6%, nearly twice as fast as world
GDP. But since 2013, international trade growth slowed
measurably to less than 3% per annum in 2015 (Figure 1).
Consequently, the increased level of uncertainty and
volatility, combined with persistent fragility in some coun-
tries, require greater operational vigilance and better risk
monitoring from international financial institutions. At the
same time, the new sustainable development agenda has to
be at the core of all activities to ensure impactful growth
and development. Most OIC governments are reshaping
©2017 University of Durham and John Wiley & Sons, Ltd. Global Policy (2017) 8:3 doi: 10.1111/1758-5899.12478
Global Policy Volume 8 . Issue 3 . September 2017
392
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