What kind of policy reforms should be undertaken both at the domestic and international levels to support LDCs technological upgrading and innovation for better integration into global value chains? Innovation and technological change have radically altered the economic landscape over the past decades, contributing to growth in developed economies and promoting the catch-up process in developing countries. Despite these developments, there remain concerns that least developed countries (LDCs) have failed to derive significant benefits from the process of technological advancement and innovation, which if adequately addressed, can create opportunities for their integration into global value chains (GVCs). Technology and trade link in LDCs The share of LDCs in total world trade still remains marginal, accounting for approximately only 1 percent. This figure suggests that the linkage between technology and trade across LDCs is weak in both directions, i.e. both in terms of the role of technology in trade competitiveness and the role of trade through knowledge transfer. There are many reasons for these weaknesses. Due to low per capita income, the domestic market is small in LDCs. As a result, firms are, in general, small and medium-sized enterprises with limited opportunities to reap the benefits of economies of scale and...
Written by Xiaolan Fu, Shaheen Akter