An additional aspect of internal logistics performance relates to the development of
private sector capacity, including through improvements in human resources. Due to
the variety of activities involved in logistics, as well as a historically restrictive
approach to the regulation of some of them, developing countries frequently find that
logistics markets are highly fragmented, with a preponderance of small, relatively
inefficient suppliers. Integrating logistics markets both nationally and internationally
can help mitigate this problem, as it provides an incentive for consolidation among
firms, particularly when openness to FDI is part of the overall approach. Entry by
large, foreign firms not only encourages integration of markets, it tends to promote
human capital upgrading as these firms train local employees to meet international
quality standards. Clearly, the need for consolidation and openness to large investors
needs to be balanced by the need to ensure an adequate degree of competition in the
market. Openness on a non-discriminatory basis is therefore to be preferred.
An additional aspect of internal logistics performance relates to the development ofprivate sector capacity, including through improvements in human resources. Due tothe variety of activities involved in logistics, as well as a historically restrictiveapproach to the regulation of some of them, developing countries frequently find thatlogistics markets are highly fragmented, with a preponderance of small, relativelyinefficient suppliers. Integrating logistics markets both nationally and internationallycan help mitigate this problem, as it provides an incentive for consolidation amongfirms, particularly when openness to FDI is part of the overall approach. Entry bylarge, foreign firms not only encourages integration of markets, it tends to promotehuman capital upgrading as these firms train local employees to meet internationalquality standards. Clearly, the need for consolidation and openness to large investorsneeds to be balanced by the need to ensure an adequate degree of competition in themarket. Openness on a non-discriminatory basis is therefore to be preferred.
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