Supply chain is a development issue

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The logistics gap between high and low income countries is wide and efforts to narrow it appear to have stalled, according to the World Bank.

Its report “Connecting to compete” is the third to look at the impact of logistics on the global economy.

It found that from 2007 to 2010, lower performing countries improved their overall Logistics Performance Index scores more than did higher performing countries. But from 2010 to 2012, they were not able to narrow the gap any further.

The World Bank points out that better overall logistics performance and trade facilitation are strongly associated with trade expansion, export diversification, attractiveness to foreign direct investment, and economic growth.

The gap between the highest and lowest scores in the 2012 LPI, and the score distribution across countries, are about the same as in 2010. Singapore ranked highest while Burundi was the lowest with a score that was only one fifth of Singapore’s.

The report suggests that this stalled improvement probably reflects conditions that shifted governments’ priorities away from logistics reform— such as the global recession and the European sovereign debt crisis. In some regions, declining trade further disrupted supply chains.

What is apparent from all this, is that supply chain plays a key role in facilitating economic development – and it is particularly important in low income countries.

The report argues that events such as the recession and economic troubles in Europe in 2011 may have derailed planned logistics reforms, so it is now all the more urgent that countries and donors renew their efforts to improve logistics.

But, while supply chain professionals recognise the link between efficient supply chains and economic growth, you can be sure that there are plenty of people outside the profession that simply don’t get it. Perhaps that is the first issue that needs to be addressed.

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