4 SUMMARY AND CONCLUSIONS

Table 5 presents a summary of all of the information given earlier about the size of the global forestry sector. This shows that, at the global level in 2000, the (formal) forestry sector employed 12.9 million people, generated USD 354 billion in value-added and exported products with a total value of USD 144 billion. Furthermore, at the global level over the last decade, employment increased by about four percent, value-added increased by one percent (in real terms) and the real value of forest products exports increased by 50 percent.

Table 5 Summary of the trends and current status of the total forestry sector employment, value-added and exports by region

Region	Regional distribution of global forestry sector employment, value-added and exports in 2000						Change in absolute values over the period 1990 to 2000
	Employment		Value-added		Exports		Employment	Value-added	Exports
	millions	%	USD bn.	%	USD bn.	%	%	%	%
Africa	0.5	4	8	2	3	2	+6	+5	+60
West and Central Asia	0.4	3	3	1	<1	<1	+28	-14	+169
Developed Asia-Pacific	0.6	5	49	14	4	3	-20	-20	+31
Developing Asia-Pacific	4.9	38	39	11	16	11	+16	+34	+57
Western Europe	1.7	13	81	23	61	42	-8	-13	+50
Eastern Europe	1.9	15	9	2	10	7	-15	-27	+137
North America	1.5	12	136	38	44	31	-1	+10	+33
Latin America & Caribbean	1.2	10	30	9	6	4	+39	+46	+90
All tropical countries	3.0	24	48	14	16	11	+23	+34	+47
All temperate countries	9.9	76	306	86	128	89	-1	-2	+50
World total	12.9	100	354	100	144	100	+4	+1	+50

Note: the changes in value-added and exports are changes in the real value of these items (i.e. adjusted for inflation).

At the regional level, the above table shows some interesting and important differences between regions.

First, in Africa, the table shows that there have been some improvements in the sector, with increased employment, value-added and exports from the sector over the last decade. However, one country - South Africa - accounts for a large proportion of these improvements.

Generally, the forestry sector in Africa does not perform well compared with other regions. For example, Africa accounts for about 16 percent of the global forest area, but only two percent of global value-added and exports. Furthermore, the level of value-added and exports per employee is well below the global average. The structure of the forestry sector in Africa (i.e. the predominance of forestry activities compared to forest processing activities) suggests that Africa still suffers from a significant lack of industrialisation and general development, due to a variety of political, economic and structural problems. Addressing these problems is likely to remain a concern for policymakers in this region for many years to come.

At the other end of the scale, the three developed regions (North America, Western Europe and the Developed Asia-Pacific region) account for about 30 percent of global employment and the majority of global value-added and forest products exports (i.e. 85 percent of value-added and 76 percent of exports). As would be expected, for almost all measures of productivity (e.g. production, value-added or exports per CUM/MT, per hectare of forest or per employee), the forestry sector in these three regions performs at a level that is well above the global average.

However, it is interesting to note that, in terms of the trends in these figures, only exports are increasing in all three regions. Employment is declining, but this is largely due to the substitution of capital for labour. The disturbing trend is that value-added is shrinking in many countries in Western Europe and Japan. This is due to increasing competition in neighbouring regions, which may lead to some structural changes and changes in trade flows in the future. Policymakers and the forest industry in these countries would be well advised to reassess their competitive strengths and advantages in view of the historical changes in these figures and the likely changes in the future.

Eastern Europe presents a very interesting situation that has arisen due to the profound social, political and economic changes that have taken place in this region during the last decade. Forestry sector employment has fallen, but is still relatively high given the overall size of the forestry sector in this region. Exports are significant and have increased dramatically over the last decade. The main problem in this region is that the level of value-added in the sector is comparatively low and has fallen significantly over the last decade (although it has started to rise again in recent years).

A comparison of the figures for employment, value-added and trade suggest that there is substantial potential for development of the forestry sector in this region. However, there is also a significant need for investment in new technology, improved marketing and an upgrading of human resources. Currently, the relatively high level of employment suggests that further reductions in employment might be justified. However, given the substantial forest resources in this region (about one-quarter of the global forest area) an alternative scenario for the future could be that new investment in the sector would increase labour productivity, leading to further expansion in value-added and exports without significant job losses. The challenge for policymakers and the forest industry in this region will be to assess whether to follow the development model of the developed regions (i.e. substituting capital for labour) or to pursue expansion of the sector on all fronts.

Latin America and the Caribbean and the Developing Asia-Pacific region are the two regions where the forestry sector has expanded on all fronts over the last decade. In these two regions, forestry sector employment, value-added and trade have all expanded significantly over the last decade. This expansion has been driven by many factors, including: an abundance of cheap skilled labour; relatively abundant forest resources; a high rate of economic growth; specific policies to encourage development and investment in the sector; and more general improvements in the investment climate.

Many of these countries have made the transition from having a forestry sector that is largely focused on the production of roundwood and simple processed products to one where a diversified range of products are produced and marketed at a global scale. The measures of productivity in these countries are generally close to or above the global average and are certainly higher than the average for all developing countries. The challenge for these countries will be to maintain this momentum while, at the same time, reducing the pressure on their forest resources. Already, many countries have started to do this with significant forest plantation programmes to guarantee future wood supplies.

Finally, the figures show that the forestry sector in West and Central Asia accounts for only a small share of global employment, value-added and exports. Outside of these countries, there is little information about the forestry sector in this region. However, it seems likely that they may face similar issues to the countries of Eastern Europe.

Table 6 Summary of the trends and current status of the contribution of the forestry sector to employment, GDP and total merchandise exports by region

Region	Contribution of the forestry sector (in percent)
	Share of labour force			Share of GDP			Share of merchandise exports
	1990	2000	Change	1990	2000	Change	1990	2000	Change
Africa	0.2	0.2	0.0	1.7	1.5	-0.3	2.0	1.9	0.0
West and Central Asia	0.3	0.3	0.0	0.5	0.3	-0.2	0.1	0.1	0.0
Developed Asia-Pacific	1.0	0.8	-0.3	1.4	0.9	-0.4	0.8	0.8	-0.1
Developing Asia-Pacific	0.3	0.3	0.0	2.1	1.5	-0.6	2.5	1.4	-1.1
Western Europe	1.1	0.9	-0.1	1.5	1.1	-0.4	2.9	2.5	-0.4
Eastern Europe	1.3	1.1	-0.2	1.5	1.4	-0.1	2.9	3.6	+0.6
North America	1.1	0.9	-0.1	1.7	1.4	-0.3	6.0	4.2	-1.8
Latin America & Caribbean	0.5	0.6	+0.1	1.5	1.7	+0.1	1.9	1.7	-0.2
All tropical countries	0.7	0.6	-0.1	1.5	1.2	-0.4	2.9	2.4	-0.5
All temperate countries	0.2	0.2	0.0	1.9	1.7	-0.1	3.3	1.9	-1.4
World total	0.5	0.4	-0.1	1.6	1.2	-0.3	2.9	2.3	-0.6

Table 6 presents a summary of the information about the contribution of the sector to national economies or the economic importance of the sector. This shows that, at the global level in 2000, the sector employed about 0.4 percent of the labour force, contributed about 1.2 percent to GDP and accounted for about 2.3 percent of global merchandise trade. However, these measures have all declined over the last decade, due to more rapid growth in other parts of the economy. Furthermore, this decline in the sector appears for all of the measures in nearly all regions.

Comparing between the regions, the contribution of the sector to employment is relatively more important in the three developed regions and Eastern Europe. This is partly because of the employment generated in the forest processing sector, which is generally less developed in developing countries. The importance of forestry sector employment has increased in Latin America and the Caribbean over the last decade and remained about the same in the other developing regions. This indicates that the expansion of the sector in these regions has created new jobs at a rate that has kept up with the growth in the labour force in these countries. In the developed regions and Eastern Europe, the importance of employment in the sector has declined due to a reduction in the numbers employed in the sector.

In terms of the contribution to GDP, the forestry sector is relatively important in Africa, the Developing Asia-Pacific region, Eastern Europe and the Americas. However, with the exception of Latin America and the Caribbean, the importance of the sector has declined over the last decade. In particular, there has been a significant fall in the contribution of the forestry sector to GDP in the Developing Asia-Pacific region. This is due to the very high rates of growth in other parts of the economy in this region.

The last point above reflects a more general observation from this analysis. In general, value-added in the forestry sector has not increased rapidly except in a few countries where development of the sector has been a specific national development priority. Very few countries have focused on the development of the forestry sector, preferring in stead to promote the development of other sectors. Thus, it is generally the case that the forestry sector has been left behind, particularly in rapidly growing economies. Furthermore, this suggests that the forestry sector is not a major driving force for economic growth and development except in specific circumstances.

Comparing between the three measures, the forestry sector makes the greatest contribution to merchandise exports. However, although exports of forest products have increased substantially over the last decade, the contribution to merchandise exports has fallen. The regions where the forestry sector is a relatively important component of trade are Europe and North America. Furthermore, the importance of forest products exports has increased in Eastern Europe over the last decade (compared with declining importance everywhere else).

These differences reflect the fact that most trade in forest products is between the three developed regions and Eastern Europe or between individual countries within each of these regions. The importance of forest products exports from developing regions is relatively low and has declined over the last decade. This reflects their greater comparative advantage in exporting other types of goods. It may also reflect some concern in developed countries, in recent years, about the environmental impact of forest harvesting in developing countries. In the few cases where developing countries have been successful at increasing the importance of forest product exports, it has usually been in areas where the environmental impacts of production are less controversial (e.g. exports of pulp and paper products from Brazil, Chile and South Africa).

The above comments are, of course, very generalised and there are many differences between countries in each of the regions analysed above. For example, the detailed tables presented in Annex 1 show how important the forestry sector is in many relatively small countries and in a small number of large countries. It is hoped that the detailed figures presented in Annex 1 can be used as a starting point for more in-depth analyses of forestry sector developments at the level of individual countries. In addition to this, further work on the contribution of informal forestry sector activities would give a much better and more balanced picture of the importance of the sector at the global, regional and country level.

A final point worth noting is the importance of improving the availability and reliability of statistics in this area. Many countries do not produce statistics about employment or value-added in the forestry sector (even where it may be significant) and those that do should be more careful about the presentation of statistics (or they will lose credibility). Reliable information is essential for the development of the sector and for monitoring sustainable forest management and FAO remains ready and willing to assist countries in this important area.