Merchandise trade has become an increasingly important contributor to a country’s gross domestic product (GDP), particularly for developing countries. Before the global financial crisis hit in 2008, merchandise trade as a percent of GDP for low- and middle-income economies was 57 percent, about 5% higher than for high-income economies. This is very evident in Europe and Central Asia (ECA) where merchandise trade accounts for 73 percent of the developing region’s GDP. Many ECA countries including Hungary, Belarus, and Bulgaria have merchandise trade to GDP ratios above 100 percent (155, 136, and 114 percent respectively in 2011), meaning merchandise exports are a large contributor to their overall economy.
Regardless of a country’s stage of economic development, their governments make payments to, and collect payments from individuals and businesses. Financial resources are also transferred between government agencies. These flows cover a wide range of economic sectors and activities, and in most cases, the overall amount of such flows is significant – normally ranging between 15% to about 45% of the GDP.
However, only 25% of low-income countries worldwide process cash transfers and social benefits electronically and this percentage is only slightly higher for public sector salaries and pensions—and this has considerable cost implications. By going electronic, governments can save up to 75% on costs, a significant amount in an era of stretched resources.
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Latin America will attend the Rio+20 conferences safe in the knowledge that they have done a good job over the past few years, but with the shared international need to keep pushing for environmental policies which will help create a more sustainable world.
The region is home to examples of world-class innovative projects, but also faces far-reaching challenges for the future in terms of green growth. The decisions that we take today will shape development for the next 20 or 30 years, according to this video blog from Ede Ijjasz-Vasquez, Director for Sustainable Development for Latin America and the Caribbean.