Policy Analysis

Policy Analysis

Did you know that EU trade policies have significantly increased the exports from developing countries, in particular from the LDCs, in the last decade? The policies have also helped these countries to diversify economically.

It is a well-known fact that EU trade policy is a significant tool for development policy. Indeed, the EU has a long tradition of granting preferential access into its market for exports from developing countries. Ultimately, an increase in the exports of developing countries should result in a stimulus to their global economic activity and development.

However, it is not unusual to hear criticism of EU trade policy vis-à-vis the developing countries - calling into question its effectiveness in fully respecting the principle of policy coherence for development.

A major new study assessing the true economic benefits generated by the EU trade regimes towards developing countries has recently been carried out. The study demonstrates that EU trade policy has had a positive impact in terms of policy coherence for development. Using advanced econometric techniques and large databases the study also leaves no doubt that trade preferences - such as the Generalised Scheme of Preferences (GSP) initiative - granted by the EU have significantly increased the exports and the economic diversification of developing countries and in particular of the Least Developed Countries (LDCs).

Another interesting result from the study is that the full impact of preferences on exports has arisen within two years after the preferences were granted. Finally, the study also indicates that in part these exports had a measurable positive effect on poverty reduction.

The study makes an important contribution to the global debate on the role of trade as a means of implementation for the 2030 Agenda and illustrates how Policy Coherence for Development works in practice on its trade policy dimension. It also allows to better explain to a large public of stakeholders the work of the EU in the area of Trade and Development within the European Year for Development initiative.

The study is an independent report financed by the European Commission and it was prepared by Copenhagen Economics A/S and Professor Johannes Van Biesebroeck of KU Leuven.

Policy Analysis Assessment of economic benefits generated by the EU Trade Regimes towards developing countries

Policy Analysis Export Performance and Poverty Reduction