Glass Barriers

# 1. Introduction

Border checkpoints in developing countries often teem with traders transporting small quantities on foot or pushing carts alongside trucks that sport the insignia of formal companies. Those smallscale cross-border traders may eventually be superseded by large import-export firms. But during the process of development, their trade may be a valuable avenue for poverty alleviation and women’s empowerment. This paper focuses on the latter in the context of small-scale crossborder trade in Cambodia and Lao People’s Democratic Republic (Lao PDR). It draws on recent survey research undertaken by the World Bank, and draws conclusions about the key policy implications for facilitating the poverty-reducing impact of women’s participation in small-scale cross-border trade.

Small-scale cross-border trade is thought to provide a number of benefits to developing countries. First, the literature emphasizes its importance as a means of employment and financial resources for poor smallholders and landless households, in particular in a country’s geographical (and often socioeconomic) fringes. Second, cross-border trade plays an important role in reducing price differences and volatility, thus having a positive welfare impact on poor households beyond those directly involved in this activity (World Bank 2011). Third, trade offers a way for women to earn money outside the household, which may foster empowerment.

In this context, trade facilitation projects are traditionally built on the expectation that the automation, streamlining and simplification of procedures<sup>2</sup> will foster economic activity and eventually reduce poverty. Small-scale cross-border traders, including informal, female and other categories of potentially vulnerable traders, may benefit at the margins of such projects, e.g., from improvements in transparency. They carry small quantities and may fall under customs declaration thresholds. They are poorly educated and thus cannot cope with the administrative tasks demanded of formal firms, and their profit margins may be so thin that full compliance with customs duties and other border procedures would prevent them from trading at all (Lesser and Moisé-Leeman 2009). Trade policy in developing countries thus tends to focus on large, formal firms and firms that might consider going formal despite the fact that many traders are unlikely to formalize in the medium run.

In Cambodia and Lao PDR, the two countries on which this study shall focus, women tend to be overrepresented in unpaid family labor, while wage-earning jobs are mostly taken up by men (UNIFEM, WB, ADB, UNDP and DFID/UK 2004, World Bank 2012b). Since women’s employment opportunities are often limited by cultural norms, restrictions on mobility for safety reasons and household responsibilities, the fact that trade is considered an acceptable occupation for women in the Mekong sub-region (ibid.) makes cross-border trade a valuable avenue for women’s empowerment. Lao female traders, for instance, were found in an early study to often earn more than their husbands (Walker 1999), which may allow them to gain financial independence. It therefore does not come as a surprise that small-scale cross-border trade is largely carried out by women (World Bank 2011). Prior to this study, women were known to be dominate some subcategories of traders in the Mekong sub-region, e.g., fish traders across the Cambodian-Thai

> 2 See World Bank (2012a) for Cambodia, and EMC (2012) and World Bank (2014a) for Lao PDR.

Cambodia and Lao PDR 2