Emerging nations gain importance in international trade


October 13, 1991|By Thomas Easton | Thomas Easton,New York Bureau of The Sun

New York -- Thinking of opening a foreign trading post in London, Tokyo or Berlin? A better bet may be Africa or Latin America.

Dozens of U.S.-made products -- from rags to telecommunications satellite terminals -- are in great demand from small, fast-growing countries that often are overlooked in the vast ocean of international trade. Two examples of the burgeoning trade: Secondhand clothing shipments to Africa exceeded $45 million in 1990, up 30 percent from the year before. Shipments of sophisticated airplane parts to Africa rose 45 percent, to $193 million.

Many small, entrepreneurial companies are rushing to fill those orders.

Consider Row Clothing Inc. in Baltimore. It takes old shirts, pants and other clothing rejected by bargain-hunters at Goodwill, repackages them and ships them to small, developing countries.

Row Clothing, which has 100 employees, is run by Rueven Bloch, a Lithuanian immigrant who worked sweeping floors and cutting drapes before founding the company in 1979. Each year, he ships about 20 million pounds of clothing, fibers and rags, filling 20 to 30 containers a month at the port of Baltimore. The best of the clothes are resold; the worst are cut into strips for wiping cloths or, in the case of polyester, reprocessed and dyed.

They wind up in Africa and Asia, and Mr. Bloch has begun looking for more orders in Eastern Europe and Latin America.

Meaningful trade? Yes, as part of a small but encouraging trend. Between 1984 and 1990, the countries with the largest percentage gain in imports from the United States were Third World countries.

In Namibia, imports of U.S. goods increased 1,000 percent over the six-year period; in French Polynesia, imports of U.S. goods increased by 900 percent, according to the International Monetary Fund. Many other countries, including Uganda, the Congo, Kiribati, Niger, Bahrain and Paraguay, tripled their imports.

These gains, of course, must be viewed in context. The vast majority of U.S. international trade is with other major industrialized countries. Monthly gyrations in trade with the two largest U.S. trading partners, Canada and Japan, are measured in hundreds of millions of dollars. Even radical annual increases in trade between the United States and many Third World countries may amount to only millions of dollars.

Still, collectively, the changes are important. Of the 15 countries with the greatest percentage increase in U.S. imports, according to the IMF, only one, Finland, is an industrialized country. Broader Commerce Department data for the first six months of 1991 finds six of the top seven export markets, in terms of growth, to be developing nations.

U.S. companies' success in exporting to many of these countries stems partly from foreign exchange issues, said Mark Killion, a senior economist at DRI/McGraw Hill in Lexington, Mass. The dollar began a precipitous slide against the Japanese yen and German mark in the mid-1980s, just as many of these countries were beginning to institute market-opening economic reforms.

The subsequent boom in U.S. exports pushed many products into non-traditional markets. And for many small, domestic companies, these markets may provide refuge from the intensely competitive -- and barely growing -- U.S. economy.

"Growth prospects for developing countries are as good as they have been for 20 years," Mr. Killion said. "They are getting out from debt problems, liberalizing their markets and allowing more access to foreign goods. That all accelerates trade."

Growth for developing countries in the coming year is projected to be 5 percent, after inflation -- almost double the level of the industrialized world. "For individual businesses and specific industries, there are terrific opportunities," Mr. Killion said. "They can gain market share in growing markets."

The message has begun to spread. Sally Miller, director of the office for Africa at the Commerce Department, said her department has heard more interest in the past two years from U.S. companies wanting to do business in Africa than it had in the previous eight.

In an important shift from the development boom of several decades ago, the proposals aren't for huge aluminum smelters or other major industrial projects. Most deals are small and don't require debt, involving, for instance, brick or tile factories, or seed replication labs.

"We're excited," Ms. Miller said. "They are all doable."

Row Clothing isn't the only Maryland company to take advantage of these markets.

Advanced Business Systems America Inc. of Rockville is going after many of the same markets as Row, but with far more sophisticated products. It has shipped computerized point-of-sale grocery store cash registers to Togo, Mali, Cameroon, the Ivory Coast, Niger and Ghana. "It's a small business, but it's growing," said Senior Vice President Roch Kobea, noting that his products range in price from $6,000 to $15,000.

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