International Trade in Services.pdf - DSpace at Khazar University

Market Structure, Liberalization, and Trade 173
sales. In most developing countries, the retail sector is largely unorganized and
principally consists of small family-run neighborhood shops and outdoor markets.
While the leading global actors are mainly European and U.S. companies,
some retailers based in developing countries are successfully expanding in their
respective regions, including in Africa, Asia, and Latin America. They are part of a
worldwide trend toward concentration and larger outlets in distribution, and
South-South trade is increasingly prominent in this development.
In the future, it is likely that the pattern in the evolution of large emerging markets
will follow that of the distribution sector in developed countries. The pace of
change and modernization will largely depend on the pace of liberalization in
market access. Regulation and competition policy will additionally affect the
degree of market concentration and vertical integration. The gains from liberalization
in market access in the retail sector will be greater if adequate regulation
and trade liberalization are carefully sequenced. If regulatory policies are not in
place or are poorly coordinated with trade policies, the gains from distribution
service liberalization are likely to be compromised. Countries that have experienced
modern retail expansion have benefited from competition policies that
restrict concentration and collusion and from reduced limitations on town planning,
zoning, and opening hours. They have also prohibited pricing below cost,
ensured prompt payments to suppliers, and strengthened supply-side capacity
and access to finance.
The international trade in distribution services is mainly conducted through
outward direct investment in foreign affiliates or joint ventures. Strict market
entry conditions in the past delayed modernization in the distribution sector in
countries such as China, India, and Russia. The opening of domestic retail markets
has led to rapid increases in foreign participation in some countries. Besides
prospective improvements in quality, choice, and pricing, modern retailing practices
may provide a more convenient shopping experience and safer and relatively
high-paying jobs. They may also create jobs in ancillary food processing, logistics,
supply chain management, and information technology–based back-office functions,
including modern purchase tracking and accounting practices. However,
parallel improvements are often needed in the transport networks, electricity supply,
and telecommunications services on which the distribution service sector
depends. Thus, coordination among the various ministries and agencies involved
in development in these areas is essential.
Liberalization in the distribution sector generally entails significant adjustment
costs, as well as benefits. Modern retailing is likely to lead to the closure of
many mom-and-pop stores, other small or less efficient retailers, and, in poorer
developing countries, open markets for fruits, vegetables, meat, and fish products.
It may also require better health and safety standards, in addition to frequent