1st July 2002
Green Markets, Often a Lost Opportunity for Developing Countries
A great deal has been written about the new market for sustainable products, organic products, environmentally-friendly products and products with a positive social impact (fair trade). As this is a market driven primarily by the preferences of consumers in industrialized countries, producers in developing countries hoped that this could be a market in which they could enjoy significant participation.1 The hypothesis was that the production of environmentally-friendly goods and the conquest of these new markets would benefit both the environment and economic growth, thus contributing to sustainable development in the developing world.
Successful examples of developing country exports in this market segment are, however, still scarce.2 It appears that the variables for success identified in relation to these very few cases have not provided sufficient guidelines for the projects to be replicated, and obstacles to success have not been identified sufficiently clearly for a strategy for the future to be developed and implemented.
This study aims to analyze how the potential of green markets could be taken advantage of in order to develop future markets. Obstacles to the introduction of green production are identified and suggestions are made as to how these obstacles could be overcome so as to improve and create real opportunities in the future. Both the situation in the importing countries and the domestic context are analyzed.
Two product lines serve as case studies: certification of agricultural products (organic wine), and certification of forestry products (sustainable forest management). These are analyzed in the context of Chilean exports to the European Union (EU). Two hypotheses are tested:
1. The existence of green industry “havens” in importing countries (the fact that green markets exist, but are reserved for home producers).
2. There is a lack of capacity to develop new green markets in Chile.
The first hypothesis examines issues of transparency, participation, training and information, certification costs and marketing channels, as well as the existence of subsidies. The basic question that underlies this hypothesis is whether there are market entry barriers or there is even explicit discrimination against green exports from third countries. The existence of market entry barriers in the form of complex marketing channels or lack of information on the market may pose problems for the exporters, however, these problems will have to be confronted by the exporters themselves, probably assisted by their governments or by some form of development assistance provided by the importing country.
The second hypothesis concentrates on aspects such as institutional and support structures and the technological adjustments that need to be made in the exporting country.