Danes told to make aid effective by importing more

Denmark is one of the world's top foreign aid donors but has failed to help developing countries' economies grow by buying more goods from them, a new study based on OECD data shows.

The development minister has said the current aid package recognises the need for closer coordination between aid and trade. But EU trade barriers and subsidies, for instance on sugar, and poor product quality have hindered import growth.

The Danish consultancy firm Dalberg said in its study, which uses Organisation for Economic Cooperation and Development data, that Danish imports from developing countries had accounted for less than two percent of its GDP for the past decade.

This compared poorly with Nordic neighbour Finland, whose imports from such nations were worth around four per cent of GDP.

"What these (developing) countries need is growth," said Dalberg research consultant Soeren Peter Andreasen.

"And growth is boosted through the creation of a stronger private sector and by making better use of markets that enjoy low production costs. Denmark seems to have cut itself off from this process."

Developing countries' failure to meet quality standards expected by Nordic consumers is one reason why imports from these regions remain low, according to the Danish Chamber of Commerce.

"But another major factor is of course the trade barriers that exist, in particular within agriculture," the Chamber's deputy director Torben Lentz said.

"If developing nations could export sugar, for example, at world market prices they would have a real competitive advantage."

The World Trade Organisation recently ruled that about half the European Union's sugar exports were illegal because they exceeded limits on the amount that could be exported with subsidies.

Critics say the EU exports depress world sugar prices, costing poorer countries hundreds of millions of dollars in lost income.

In May, the controversial Copenhagen Consensus drawn up by eight prominent economists ranked free trade the third most pressing area for international attention after HIV/Aids and malnutrition.

The economists - some of them Nobel prize winners - were criticised by non-governmental organisations for reducing aid to a cost-benefit equation, but provoked a debate that focused on the need to re-think how aid can be used most effectively.

"The Copenhagen Consensus gives politicians clear guidelines as to how to prioritise so that they can help the poorer nations," the Consensus' organiser Bjorn Lomborg said.

Danish Integration and Development Minister Bertel Haarder, said recently that Denmark would focus more on trade in its current aid package.

"The aid programme makes clear that development policy cannot be seen in isolation and that there needs to be a closer link and better coordination between development policy and trade policy," Mr Haarder said.

The programme, entitled Security, Growth and Development, allocates 54.2 billion crowns to socio-economic development, democratisation and good governance, stability and security, refugees, emergency aid and the environment over the next five years.