trade accelerator

Whiteshield Trade Accelerator – boosting trade impact with fast results

I – A new Approach to Trade

International trade plays a crucial role in the economic growth and development of countries around the world. It enables them to access new markets, expand their export industries, attract foreign investment, and stimulate job creation. More than ever, given the post COVID-19 economic recovery, geopolitical tensions and disruptions in consumption habits, governments have the opportunity to speed up reforms and create an enabling environment that can propel their economies to new heights. This article explores Whiteshield’s approach to support governments in the ways to accelerate decision making and most importantly, to select stakeholders and how to engage with them in order to ensure adequate priorities are adopted, proper governance and metrics are aligned and ultimately results are achieved.

First and foremost, it has become imperative that governments adopt a different approach to seize trade opportunities. Traditional approaches range from producing analyses and studies on macroeconomic indicators and general trends to large infrastructure development projects that usually need to be conducted under ultra-complex processes, financing and contracting procedures to generate longer term impacts, not to mention the usual challenges to cope with electoral terms and other shorter-term priorities.

Without underestimating the importance of such initiatives, what we have observed in conducting projects in several countries is the increasing need for execution-led initiatives, combining the short and long-term views, and most importantly, providing stable, open and predictable regulatory environments for the private sector to lead the implementation of the initiatives. The crucial aspects of this new approach are the change in attitude, increased focus on the desired outcomes and less on the rigid processes and risk avoidance approaches that are typically followed by governments.

This paradigm shift will enable governments to move away from siloed projects to adopt a more holistic approach (for example, tackling trade development will generate economic growth, tax revenues, employment, investment opportunities, alignment of educational systems, immigration policies to meet labour market needs, and so on), as wells as provide an agile environment to capture fast results and incorporate learnings and adjustments to meet all concerned stakeholders’ expectations (citizens, government, private sector).

This new approach will also enable positive momentum as tangible results are achieved along the way and decisions can be taken more quickly to capture unforeseen opportunities that arise either from unknown factors or from sudden changes in the general business environment (such as major natural events, supply chain disruptions, geopolitical tensions, among others).

Through our experience in trade, which qualifies us to help a variety of government and trade entities solve internal issues and unlock potential, and our research and extensive data analysis, Whiteshield has developed a systematic approach that enables governments to act fast, collect results, adjust course, and reap the benefits of these actions. This approach allows our clients to move away from traditional pure “strategy design” initiatives that, although important, often lack actionable items “from day one” and require multiple rounds of validation and engagement within different silos in the political and administrative spheres.

By using the Whiteshield Accelerator methodology, governments can quickly organise discussions with private sector, put in place an executable framework and ensure constant course adjustments in order to focus on agreed outcomes and avoid distractions with lower value-added initiatives, once regarded as being the priorities. However, it is crucial to align on the vision and set the direction to be achieved.

II – Where are the key opportunities – The CCC framework

Sizing the potential benefits with a top-down approach will help with quickly understanding where major gaps and opportunities are, with extensive use of data analytics tools, benchmark comparisons and interviews with relevant stakeholders. Our experience has shown when running trade Accelerator programs, countries can typically reap benefits and collect faster and impactful results categorised into three key groups of actions: Capture, Consolidate and Create (CCC).

  • Capture is when a country (or region) is able to divert or disrupt an established trade pattern by offering a convenient alternative route through/via its territory or logistics infrastructure. When the country can create comparative advantages with its trading environment and traders naturally opt for using that route, we can say the country is “Capturing” that trade. Not necessarily with the effects of Trade Agreements but also by providing other tangible incentives such as faster transit time, lower costs or better services. Examples of “Capture” are either when a country manages to create a transit hub that is more convenient to stop over during the trade journey or when external factors such as trade sanctions create opportunities to capture trade from other existing trade routes. The first category includes UAE that is strategically positioned to be more competitive than Europe on trade routes between China and South America or between India and Africa, while the second category includes countries like Kazakhstan, Uzbekistan and Azerbaijan that are offering routes for trade via Middle Corridor or its airport hubs as alternatives to the sanctioned routes.
  • Consolidate is when a country develops or strengthens its regional position and can incentivise additional trade with its immediate neighbours by providing efficiencies and lower barriers. It is the ability to unlock incremental trade opportunities within the regional area of influence which are currently constrained by existing modalities and/or modal economics. Examples cover countries which use their local advantages to create a regional hub for importing and distributing products and serving its immediate neighbours with cost efficient and better service solutions. A clear model of trade consolidation is represented by the establishment of the European single market in 1993 which resulted in increasing the intra-EU exports of goods by 510% between 1993 and 2021.
  • Create is when the country is able to develop new trading opportunities for its local industry, either by facilitating imports/exports or a mix of both. We see this as “new” trade that was not happening before (due to previous tariff/non-tariff barriers, technological or infrastructure gaps). Examples of “Create” include countries creating a SEZ (Special Economic Zone) with the intent to attract processing facilities and provide local raw materials to produce finished or semi-finished goods for export, and countries revising their insurance or trade finance regulations in order to create opportunities for financial services sectors to play a more relevant role in international trade in services.

Once estimates are developed and checked with the core teams, they are consolidated and assessed by the Project’s Steering Committee which discusses the overall expected impact and approves the initiatives for Accelerator implementation. A sample summary table is shown in Figure 3 below.

It is important to note that, although somewhat aligned, these concepts span beyond the WTO’s views on Trade Agreements effects such as trade creation and trade diversion. Naturally, there is a mix of science in measuring the impact of individual actions, and a bit of art in determining whether it is Capture/Create/Consolidate. There may be discussions on which bucket certain initiatives will be allocated to, for various reasons, contexts and countries’ trade strategies. But beyond the discussion of where to allocate initiatives per se, Whiteshield proposes this framework as guidance to drive efforts from the delivery teams that will be accountable for the results of policy initiatives.

In a recent case study with one of our clients, using the CCC framework, we highlighted interesting directions and opportunities to be pursued by Accelerator teams, allowing a clear understanding of areas of opportunity, commodities and industries to focus on in order to capture faster and relevant results. In this case, the client already had a certain level of regional leadership and therefore most of the opportunity would be reaped from the “Capture” and “Create” approaches, taking advantage of the geographical position and the ability to negotiate and interact with complex stakeholders.

Due to infrastructure gaps and the required investments to close such gaps, certain industries were prioritised in the “Create” analyses in order to provide higher value-added trade performance, GDP impact, jobs creation and consequent incremental tax revenues. For the “Capture” potential estimation, we analysed critical trade flows where commodities could be potentially traded via the client’s territory, by designing specific initiatives to approach private sector players that were trading (or could start to trade) such commodities more efficiently. Such initiatives were then proposed to Accelerator teams to “crack the case” and use the 10-step innovation methodology to bring fast and sustainable results.

III – Implementing the Trade Accelerator

As discussed before in this article, Whiteshield’s Accelerator methodology aims to quickly capture results and go beyond producing papers, studies or strategies. Due to the fast-paced nature of the programs, it is common that teams “roll up sleeves” and work hand in hand with clients (public and private sectors) with a deep focus on problem solving and fast implementation, as well as on agile course corrections and continuous improvements incorporation. Accelerators aim to combine tactic with efficiency, as shown below on Figure 5.

Each Accelerator is designed to achieve concrete results within 100 days, in terms of creating the sustainable framework and business momentum for the private sector to boost its results and benefit from the new trade environment.

The Accelerator teams can draw, approve and implement tangible solutions that touch the key points of the trade journeys. It is important to reiterate that it is an iterative process, focused on problem-solving techniques and the solutions are designed and aligned within and by the accelerator teams. Therefore, they are empowered to propose solutions and accountable to ensure implementation within the laws limitations, or even propose and follow-up on any potential changes in regulations that can expedite or enable the desired results.

A case study shown below illustrates how identifying bottlenecks on a journey of goods transfer from a port to an airport (for transit cargo) enabled significant reductions in time and costs, thus opening opportunities for traders to improve their operational efficiency and increase their business. Automated, streamlined processes and revised regulations (such as eliminating multiple and unnecessary inspections by customs) allowed tangible and measurable results.

How to incorporate learning and stay ahead of the curve?

Whiteshield’s policy factory encompasses a series of trainings provided to government representatives on how to overcome traditional barriers in policy design and implementation. Also, the Accelerator program offers specific trainings to all participants focusing on asking the right questions, problem solving techniques and analytical skills development with an aim to generate insightful ideas to be worked on a day-to-day basis.

Conclusion:

Governments have a pivotal role in unlocking the potential of international trade by speeding up reforms and creating an enabling environment. By recognising the importance of trade for economic growth, job creation, poverty reduction, and foreign investment attraction, governments can implement measures that facilitate trade, diversify their economies, and enhance regional and international integration. With Whiteshield’s Accelerator approach, countries can leverage the transformative power of trade to foster prosperity, improve living standards, and create a brighter future for their citizens.

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Elena BALTER

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