Gerard Buttoud and Mamoudou HamadouGerard Buttoud and Mamoudou Hamadou both work in the Laboratoire d'économie forestière et agricole of the Institut national de la recherche agronomique in Nancy, France.
The dynamism of South-South trade is often said to be a significant example of the gradual establishment of a new international division of labour. This has been particularly clear in the field of wood and wood products in the second half of the 1970s. The next step will be a genuine substitution of horizontal exchange for the traditional vertical flows. At present, however, it seems as if the transition will not be an easy one.
In the early 1970s, there was a slow but steady - almost linear - development of commercial exchanges of all commodities between countries of the south. According to most experts, this is still far from reaching its peak. Trade between developing countries has shown an average annual increase in current values of 23 percent over the last 12 years; during the same period, total world trade did not expand by more than 16 percent per annum. These figures clearly show that southern countries have begun to trade more and more with each other.
The political and economic factors underlying this phenomenon, however, are still relatively unclear, a fact that does not encourage efforts at cogent analysis of possible future developments. In fact, economic forecasters are divided into two distinct and opposing groups.
The first group sees this process as a commercial choice by the developing countries, tired of depending on the consumer economies of the developed countries. Realizing that they must combine their forces in the battle for development, the developing countries are expressing, through this commercial cooperation, their desire for collective economic autonomy. In short, the expansion of South-South trade is a result of the dynamism of the southern countries themselves.
The second group tends to oppose this view, arguing that increased South-South trade is one of the consequences of the economic recession in the northern countries. The spread of the crisis in the developed countries has, they maintain, coincided with an increase in capital accumulation in developing countries with favourable political structures; the big multinational firms use this investment strategy to offset the drop in their profits in the north. Since the reduction in imports by the north as a result of the recession has affected markets for commodities from developing countries, the solution is for the developing countries to increase trade among themselves.
Without denying that these two views may have points in common, all that can be said for the moment is that this wide-open debate will remain unresolved for a long time to come. Nevertheless, a structural analysis in terms of major groups of commodities and countries may provide a starting-point for assembling information that may lead to a better understanding of the dynamics of this trade.
The first fact to be noted from a purely statistical reading of the evolution of global trade between developing countries is its concurrence with the development of the economic crisis. The share of developing-country trade in world trade as a whole - which has practically doubled in about ten years increased in two successive stages corresponding to the two crisis periods 1973-74 and 1979-82. Analysis of the evolution of the percentage of South-South trade in total southern exports leads to similar conclusions. The general development of horizontal trade between developing countries therefore seems to be linked, at least temporarily, with the crisis.
The structure of South-South trade by major types of commodities shows differences reflecting both the export capacities and the import needs of developing countries. Thus the share occupied by mineral fuels in South-South trade, which rose from 13 to 15.7 percent in 1980, has naturally increased with the price of petroleum, but less so than the trade in these products with the north, where consumption remains much higher. Similarly, trade in chemical products and machinery is still limited, despite a steady increase, by the slow growth of heavy industry in developing countries. Broadly speaking, manufactured products traded in the south include a higher proportion of capital than those shipped to the north, whereas highly labour-intensive products, which are easier to market in developed countries, have to compete against the same type of production in the south.
As regards the geography of South-South trade, there is a marked rise in exports from Southeast Asian countries (40 percent of the total value of trade) and from Latin America (more than 33 percent), far outstripping the Near East (despite petroleum) and Africa (where a plethora of rules and regulations stifles any initiative). South-South trade, less and less occupied with raw materials, is essentially a field for the more industrialized among developing countries, particularly the newly industrialized countries, where there are both export capacities and consumer needs. Intraregional trade occurs mainly between countries in South America (80 percent of the horizontal trade) and in Southeast Asia (70 percent of the horizontal trade). The existence of big local markets, combined with low transport costs, obviously facilitates such trade.
If econometric models established by UNCTAD specialists are to be believed, the growth of South-South trade, for several different reasons, should persist and perhaps intensify in the next few years. Population expansion and rising living standards in some developing countries are maintaining import demand at the same time that markets in the north are closing more tightly. As a result, the annual average growth in the value of South-South trade, which stood at 1 percent between 1950 and 1960, rose to 22 percent between 1975 and 1980, an increase which could well continue.
TRADITIONAL LOG TRANSPORT IN BANGLADESH transport costs limit trade
A comparison of statistical information published by UNCTAD and FAO gives some idea of the part played by wood and wood products in this upsurge of horizontal trade between developing countries.
The growth of South-South exchange is clear enough. The total value of trade in wood and wood products between southern countries, expressed in current US dollars, rose thirteen-fold between 1970 and 1983. The average annual growth rate was 23 percent, very similar to that noted for all commodities traded between developing countries during the same period. As for the volume of trade, it rose in the same period from 11 million to 35 million m3 of roundwood equivalent, thus trebling in less than ten years. South-South trade in wood and wood products has expanded much faster than exports from developing countries to northern countries, with annual growth rates, in terms of volume, of 9 percent for the former and 3.5 percent for the latter between 1970 and 1983. After a slight fall in 1981, trade picked up again and developed steadily.
This increase in South-South trade in wood and wood products is all the more spectacular since it occurred at a relatively late date, when the world economic crisis was already well under way. Until 1976, this trade represented less than 4 percent of total world trade in wood and wood products. Between 1977 and 1979 it accelerated to such a point that, in the early 1980s, it had (despite the slight setback in 1981) reached the level of 8 percent, which was the figure for all commodities traded in the world (see Fig. 1). The reason, no doubt, is stagnation in the world market for these commodities since 1974, as a result of worldwide depression.
FIGURE 1 - Development of the share of South-South trade in total world trade, 1970-82
Sources: FAO, Yearbook of Forest Products; United Nations, Yearbook of International Trade Statistics
Therefore, it is not surprising that South-South trade in wood and wood products since 1974 has held such an important position among exports from developing countries. The drop in trade among northern countries also sharply affected exports from developing to developed countries. As a result, the share of trade in wood and wood products between southern countries rose rapidly from less than 20 percent of total world exports in wood and wood products by developing countries to more than 50 percent by 1982, despite a recent slowing in the growth in volume. Although the share of South-South trade in this area is not startlingly different from that of other commodities when compared with the whole of world trade, it is very much so if compared with total exports of developing countries (see Fig. 2).
FIGURE 2 - Development of the share of South-South trade in total exports, 1970-82
Sources: FAO, Yearbook of Forest Products; United Nations, Yearbook of International Trade Statistics
As South-South trade in wood and wood products has increased, so it has also undergone radical structural changes. The growth in volumes traded among developing countries was accounted for almost exclusively by processed products (mainly sawnwood, panels and pulp). Apart from a significant boom in 1973, the volume of raw timber traded increased in only modest proportions compared with that of processed products (see Figs 3 and 4)
Source: FAO, Yearbook of Forest Products
An analysis of South-South trade between 1970 and 1983 in wood and wood products by product category shows several successive stages (see Table 1). The first derived wood product to give impetus to a major rise in South-South trade was sawnwood, a trade which grew sharply from 1977 onwards, from less than 20 percent of the total to more than 30 percent. Next came panels, whose growth was steady between 1978 and 1980 and then accelerated in 1981, where it has stabilized. There are also certain indications of expanding trade in pulp and paper among developing countries, which could take shape in the next few years.
Table 1. Development of the comparative share of different categories of products in South-South trade in wood and wood products (1970-83) (in percentage of volume expressed in m3 of roundwood equivalent)
|
Year |
Rough timber |
Sawnwood |
Panels |
Pulp papers and cardboards |
|
(%) |
(%) |
(%) |
(%) |
|
|
1970 |
68.7 |
24.5 |
0.8 |
6.0 |
|
1971 |
72.6 |
20.0 |
4.0 |
3.4 |
|
1972 |
75.6 |
16.0 |
4.0 |
4.4 |
|
1973 |
78.8 |
15.0 |
3.7 |
2.5 |
|
1974 |
63.3 |
25.7 |
7.0 |
4.0 |
|
1975 |
68.3 |
17.4 |
8.3 |
6.0 |
|
1976 |
64.8 |
22.0 |
8.3 |
4.9 |
|
1977 |
55.8 |
30.2 |
8.5 |
5.5 |
|
1978 |
57.0 |
26.7 |
9.0 |
7.3 |
|
1979 |
50.7 |
31.0 |
9.6 |
8.7 |
|
1980 |
45.7 |
31.7 |
14.3 |
8.3 |
|
1981 |
39.5 |
32.0 |
18.8 |
9.7 |
|
1982 |
38,0 |
29.0 |
20.0 |
13.0 |
|
1983 |
37.0 |
29.2 |
19.6 |
14.2 |
As for the geography of South-South trade in wood and wood products, the position held by the exporting countries of Southeast Asia appears far more important than it is for all other commodities traded, since it exceeds 90 percent for tropical logs and approaches 80 percent for sawn products of non-coniferous species. This Asian supremacy, however, appears to be subject to a gradual downward trend (see Table 2), despite the considerable importance of the ASEAN countries in South-South trade in wood and wood products.
Table 2. Share of the major exporting regions in South-South trade in tropical logs and sawnwood, 1970-83 (in percentage of volume expressed in direct m3)
|
Year |
Non-coniferous logs |
Non-coniferous sawnwood |
||||
|
Southeast Asia 1 |
Africa 2 |
Others |
Southeast Asia 1 |
South America 3 |
Others |
|
|
1970 |
95.3 |
2.3 |
2.4 |
72.6 |
14.7 |
12.7 |
|
1971 |
97.4 |
2.6 |
- |
86.8 |
3.2 |
10.0 |
|
1972 |
98.3 |
1.7 |
- |
83.0 |
14.6 |
2.4 |
|
1973 |
98.7 |
1.3 |
- |
82.0 |
11.5 |
6.5 |
|
1974 |
98.7 |
1.3 |
- |
78.5 |
13.2 |
8.3 |
|
1975 |
98.2 |
1.6 |
0.2 |
89.8 |
8.1 |
2.1 |
|
1976 |
97.8 |
2.1 |
0.1 |
98.0 |
1.5 |
0.5 |
|
1977 |
95.4 |
0.3 |
4.3 |
76.1 |
4.5 |
19.4 |
|
1978 |
92.5 |
2.5 |
5.0 |
77.2 |
5.2 |
17.6 |
|
1979 |
93.5 |
3.2 |
3.3 |
79.0 |
9.0 |
12.0 |
|
1980 |
93.0 |
2.9 |
4.1 |
79.5 |
8.7 |
11.8 |
|
1981 |
93.0 |
2.4 |
4.6 |
88.5 |
5.7 |
11.8 |
|
1982 |
92.0 |
3.5 |
4.5 |
78.5 |
10.9 |
10.6 |
|
1983 |
91.0 |
42 |
4.8 |
81.0 |
7.6 |
114 |
1 All the countries of ASEAN, Papua New Guinea: 2 Côte d'Ivoire, Ghana. Cameroon, Gabon Liberia, Nigeria; 3 Brazil Paraguay, Colombia
A similar conclusion may be drawn from a look at the share of developing country exports by the countries in Southeast Asia. A continually increasing proportion of wood products shipments is going to other developing countries. Asian growth in this area seems stronger than that of South American countries, for which horizontal trade represents between one-third and one-half of their exports. As for Africa, despite a slight increase in log shipments to other southern countries beginning in 1978, the region is still not very involved in this trade (see Table 3).
Table 3. Share of South-South trade in exports of tropical logs and sawnwood from the major exporting regions (in percentage of volume expressed in direct m3)
|
Year |
Non-coniferous logs |
Non-coniferous sawnwood |
||
|
Southeast Asia |
Africa |
Southeast Asia |
South America |
|
|
1970 |
28.4 |
3.0 |
23.8 |
22.6 |
|
1971 |
30.5 |
4.2 |
25.3 |
4.8 |
|
1972 |
30.7 |
2.8 |
21.4 |
21.5 |
|
1973 |
33.6 |
2.4 |
21.5 |
16.5 |
|
1974 |
23.9 |
1.8 |
28.9 |
23.5 |
|
1975 |
36.4 |
3.7 |
34.2 |
19.5 |
|
1976 |
34.4 |
5.0 |
39.6 |
6.0 |
|
1977 |
39.0 |
0.9 |
45.0 |
18.7 |
|
1978 |
42.4 |
8.8 |
46.3 |
25.7 |
|
1979 |
40.7 |
8.8 |
41.5 |
32.2 |
|
1980 |
39.6 |
7.4 |
48.8 |
31.3 |
|
1981 |
40.8 |
5.6 |
53.8 |
21.8 |
|
1982 |
39.9 |
9.2 |
51.9 |
50.2 |
|
1983 |
42.5 |
11.3 |
51.1 |
38.7 |
The trade in wood and wood products among developing countries is conducted in an even more limited regional (or subregional) context than trade in other commodities. The ASEAN countries trade among themselves and with their Asian neighbours - exports of logs to Taiwan (Province of China) and to the Republic of Korea, for example. A very small proportion (about 5 percent) of exports leave Asia. Very close if not exclusive relations link countries such as Singapore and Hong Kong, for instance, to suppliers of logs or sawnwood such as Malaysia and Indonesia. The situation is very similar in South America: recent exports of resinous sawnwood from Chile have been going mainly to other countries on the continent; and Brazil and Argentina import their sawnwood products from neighbouring Paraguay. South-South trade in wood and wood products therefore appears to be mainly intracontinental.
TROPICAL LOGS FOR TRADE an increase in South-South exchanges
Although the statistics set forth above provide some insight into recent changes in South-South trade in wood and wood products, they certainly do not constitute an adequate basis for precise forecasting of trends in horizontal trade between developing countries. A brief look at them may, however, help to identify factors which may play a part in future development.
The first and most obvious consideration, which is not peculiar to South-South flows, is the bulk and weight of the commodities traded, inevitably meaning higher transport costs and therefore higher prices. International competition is dependent essentially upon transportation costs, which is why South-South trade has such a strong regional character. It is therefore probable that trade relations will be increasingly established in a micro-regional context, within which international interdependence will be redefined. To a certain extent, and for the same reasons, an even greater substitution of South-North trade by South-South trade can be foreseen.
This evolution should be even easier where forest resources exist side by side with large or growing consumer markets. The international juxtaposition of such conditions has undeniably constituted a decisive advantage for the development of regional trade in Southeast Asia. The proximity of "populated" countries (China, India and, to a lesser extent, Egypt or Nigeria in Africa) with "rich" countries (petroleum-producing countries, Brazil) should therefore be considered a highly positive factor in the development of exports to the south.
There are certainly some major constraints to the development of South-South trade which, as regards wood and wood products, are becoming increasingly serious. The limitations on horizontal trade that they imply have largely contributed, for example, to the exclusion of the African continent from the general evolution of South-South trade described above.
It would be too complicated to list these constraints here in order of importance. Broadly speaking, however, the main constraints are: the weakness of local markets, not only because of the limited number of people involved but also because of the low level of consumption; a lack of complementarity at the production level, namely the production of different product lines within the same geographical area; and, the inadequacy of transportation, communication and marketing networks.
However, these are not the only problems. Attention should also be drawn to the heavy burden of customs duties, non-tariff barriers, and exchange restrictions. Worst of all, southern countries usually find themselves in the position of producers and "passive" exporters. The various stages of production, processing, marketing and distribution of their exports including logs and, increasingly, sawnwood - are controlled by traditional importers in the developed countries. Regional economic institutions, whose operations are usually based on those in force in the north, lose sight of local economic, political and social realities. Access by developing countries to sources of finance or credit, which are controlled mainly by the developed countries, is made all the more difficult.
If South-South trade is to expand in the future, as most analysts feel it will, there will almost certainly have to be a break with the traditional international division of labour, which has already been considerably modified under the influence of economic change.
LOADING A LOG AT POINTE-NOIRE better to export products
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