International Trade in Services.pdf - DSpace at Khazar University

144 International Trade in Services
reduce inventory levels. The improved quality standards set by large retailers can
contribute even within developing economies to help bring local produce to the
consumer more quickly, in better condition, and at lower prices. Supply chain
control is the key to reducing waste, which is estimated in the range of 25–40 percent
in farm produce. Product compliance monitoring and testing against private
and regulated standards are information intensive; they involve large numbers of
suppliers and increase in complexity whenever the regulatory regimes governing
consumer goods necessitate closer relations with suppliers (Nordås, Geloso
Grosso, and Pinali 2007).
An increased market presence by foreign distribution companies not only
offers prospective gains, but also prospective costs, particularly if the sector is subject
to strong pressures to restructure. Retailing forms the major part of the value
added and is largely based on single outlets under sole proprietorships (momand-pop
stores). If large, efficient supermarkets and hypermarkets are built by
domestic or foreign investors, many of these small shops are likely to close down
in major population centers. The poorest people in rural areas and some city suburbs
may be inadequately served if overall consumer demand increases because
major retail companies tend to build their large stores to cater mainly to urban
areas. Policy makers in developing countries who undertake to open their markets
in the distribution sector will thus be at an advantage if they proceed with caution
and implement measures in parallel that soften the adjustment process for small
entrepreneurs (discussed below).
The market structure of the distribution sector varies widely in terms of
market concentration, joint purchasing, vertical wholesale and retail with one’s
own brands, and internationalization. The economies of scale and scope are
significant, and the largest companies tend to innovate more often than do the
smaller companies. In developed markets, concentration is more marked in
food retailing, but the pattern varies because of differences in national regulations
on market entry and ongoing business. Small independent retailers tend
to form joint purchasing groups to counter the power of large food producers
and retailers. Vertical integration has spurred growth in own-brand products,
while restrictive regulations often impede the development of large national
retail groups.
Cultural and historical differences account for regulatory differences on shop
opening hours and weekend openings. In general, the liberalization of opening
hours leads to a rise in the supply of new services and greater levels of employment.
Regulations on product safety, hygiene, labeling, quality standards, and
loss-leading can have a significant effect on ongoing business. Three factors
account for most of the variances across countries: general restrictions on access