Over the last 30 years, a “development strategy” has increasingly been assumed to be synonymous with a “liberalisation strategy”, in particular by major donors and lenders. While some countries and sectors have prospered – at least in the early stages of liberalisation – for most, liberalisation has not proved to be a panacea for development.

This is not surprising since successful “development” in the past has been associated not with rapid liberalisation but with a strategy of managed and controlled integration into regional and global economies, in which knowledge, innovation systems, and technology have played a crucial role. Rather than simply liberalising, this kind of “strategic trade integration” aims to improve the conditions of a country’s participation in world markets by making use of active policies to foster innovation and technological upgrading through improving competitiveness - all of which can help to translate trade-led growth into sustainable development. This approach may at certain moments imply not only working proactively to strengthen local enterprise networks but also at times protecting sectors of the economy least able to cope with the full force of international competition. Today’s developing countries however, find themselves in an international environment where many of the tools that have been used in the past to pursue “strategic trade integration” are ruled out as the price of accessing loans or as a consequence of inclusion in global or regional trade agreements.

The outcomes of the Uruguay Round negotiations have brought about a large increase in the encroachment of trade rules on domestic economic policy autonomy. While most of the texts that make up the multilateral trading system are ripe with language about making trade responsive to the needs of development, the reality is that trade rules are designed with trade liberalisation in mind, and not development. Any deference to development generally falls under the rubric of special and differential treatment (S&D) - a body of provisions that has evolved from an instrument for making trade liberalisation supportive of development (in GATT), to its current manifestation (in the WTO) as an instrument for helping developing countries develop the legal and institutional capacity to undertake their trade liberalisation obligations.

The capacity of developing countries to foster industrial clusters and systems of innovation, promote enterprise networks and linkages, and generally move up the value chain of production, has also been affected by the encroachment of trade rules. Policy-makers and negotiators alike far too often overlook the trade-related elements of technology and innovation policies in promoting competitiveness. Issues of intellectual property rights, foreign direct investment, and global value chains are of paramount importance.

With this picture in mind, ICTSD’s programme on Building the Trade and Sustainable Development Agenda, in collaboration with Christian Aid, will use the concept of “spaces for development policies” to explore some key issues relating to special and differential treatment, as well as the relationship between technology/innovation policies, development strategies, and trade rules.