Inadequate export promotion of small industry products
Undeveloped export promotional material
By conveying information to consumers, distributors and processors, and by speeding up adjustment to technological or economic change, market promotion reduces imperfections in market operations. It has a important role in the competitive process, increases consumer satisfaction and - by expanding demand- results in higher prices and/or a larger volume of sales for producers. Unlike "brand" promotion, which is aimed at expanding a given producer's share of the existing market, "generic" promotion is aimed at expanding the size of the market and so must be financed internationally. Existing international financial institutions, however, have not filled this role: very little has been done in terms of horizontal diversification to address the problem of commodities in global oversupply, no generic market promotion programmes have been financed, and generic research and development efforts have deliberately been concentrated on food crops. International financial institutions and individual developing countries are geared to looking at projects in a country rather than global commodity context. Besides, the financial institutes have been unable to lend to commodity organizations. Although in a few cases producers' associations have been able to carry out generic research and development and market promotion, in most cases financial resources and the necessary organizational structure has been lacking.
[Developing countries] In fact, most small-scale industries and handicrafts in the developing countries turn out products of a type, quality and price which do not meet satisfactorily the requirements of the domestic market, let alone those of consumers in the advanced countries. In the less developed countries, the frequently noted preference for the imported product as against the corresponding domestic one, is more often than not due to appreciable shortcomings of the latter. These shortcomings are due to the well-known weaknesses of small-scale industries and handicrafts - lack of technological and managerial knowledge, inadequate skill of labour, primitive or antiquated equipment, unsatisfactory premises and working conditions, use of poor raw materials, lack of information on markets - which tend to perpetuate themselves for lack of financial resources and inadequacy or non-existence of assistance, servicing, training and financing facilities.
If the developing countries are to secure the foreign exchange they need, and achieve fuller employment, they must substantially increase their manufactured exports. It is here that world demand grows most rapidly. And there is a variety of products which these countries can produce at competitive cost; products that generally have either a high labour content, or that utilize domestic materials. Growth in exports of manufactured goods from the developing countries has already been rapid. They started, however, from such a small base that the share of the manufactured exports of the a small base that the share of the manufactured exports of the developing countries remains less than 20% of the manufactured imports of the developed nations, and one-third of one percent of their GNP.