The Role of State Trading Enterprises and Their Impact on Agricultural Development and Economic Growth in Developing Countries

A Journal of the Canadian Agricultural Economics Society

The Role of State Trading Enterprises

and Their Impact on Agricultural Development
and Economic Growth in Developing Countries

George N. Vlontzos

Contract Lecturer, University of Thessaly, Volos, Greece

The Issue

The role of state trading enterprises (STEs) is significant for international trade, especially
since the Uruguay Round. They account for large shares of world trade in certain
products: about 40 percent for wheat and 30 percent for dairy products (WTO, 2000). This
article examines the influence of STEs on the development of the agricultural sector in
developing countries. During both the Uruguay Round and Doha Round negotiations,
there have been serious complaints from developing countries that the operation of STEs
is trade distorting and creates serious obstacles to agricultural development.

Implications and Conclusions

Through application of the five forces competitive model (FFCM) of Michael Porter, the
competitive environment is examined, and special attention is given to STEs that have a
considerable distorting effect. During the Doha Round of WTO negotiations the role of
STEs is again under consideration, the target being to decrease or eliminate their trade-
distorting operational practices. At this point there are proposals, on a modalities level,
that can promote the above target and help developing countries to establish modern and
profitable agricultural sectors.

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