COMCEC Trade Outlook 2017
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The SMEs of the OIC Member States also face challenges in exporting. The Workshop held on 12-
14 June 2012 in Ankara, Turkey21 defined the major common obstacles faced by the SMEs in
exporting as the following:
 Obtaining reliable foreign representation and maintaining control over foreign
middlemen
 Identifying foreign business opportunities
 Limited information to locate/analyze markets
 Inability to contact potential overseas customers
 Keen competition in overseas markets
 Lack of home government assistance
 Offering satisfactory prices to customers
 Accessing export distribution channels
 Difficulties in enforcing contracts
 Lack of knowledge on foreign market requirements
 Limited business development services, marketing and branding
 Excessive transportation / insurance costs
Government agencies, chambers and business unions provide consultancy services, business
development assistance, tax advantages, financial support etc. to promote exports in their
countries. However due to limited financial resources, underdeveloped human and institutional
capacities, many member states could not provide adequate support to their firms.
The undiversified economic structure also constitutes an important obstacle for many OIC
Member States in increasing their exports. The dependence on few products in exports also
makes these countries vulnerable to foreign demand or price shocks.
Attracting foreign direct investment (FDI) is considered a vital instrument for diversifying the
exports. Many empirical studies have examined the impact of FDI inflows on export
diversification and reached positive results. Focusing on the Low Income Countries, Jayawera
(2009) found that the cumulative effect after four years of a US$1bn increase in FDI is estimated
to be the creation of 83.5 new export lines for the host countries. Iwamoto and Nabeshima
(2012) have tested the impact on 175 countries. They found out that, FDI inflows have positive
impact on export diversification of the developing countries, but no significant effect on
developed countries. The reason according to the studies is that the Multinational Corporations
(MNCs) are more diversified and developing countries are affected by the spill-over effects of
the FDI brought by theMNCs. Another study by Hailu (2010), examined the impact of FDI inflows
on Sub Saharan Africa countries. The study found out that a 1 percent increase in FDI in the
previous year brings about 0.043 percent increase in exports of the following period.
Several studies concentrated on how the FDIs lead to
export diversification. Lipsey (2004) and Hailu (2010)
suggest that FDIs main contribution is knowledge of the
international markets. FDIs also result in indirect inter
and intra-industry spillovers to host nation firms which
improve their productivity and reduce the fixed costs
“FDI Inflows are
inadequate for export
diversification
in many OIC Countries”