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Trade and Development Quarterly: The Global Dialogue

This eleventh edition contains:

Upcoming Publications

  • The World Bank 2007 Global Monitoring Report subtitled "Confronting the Challenges of Gender Equality and Fragile States" was published on April 13, 2007. The report monitors how countries are progressing with respect to the Millennium Development Goals (MDGs) and assesses the contributions of developing countries, developed countries, and international financial institutions toward meeting universally agreed development commitments. Fourth in a series of annual reports leading up to 2015, this year's report reviews key developments of the past year, emerging priorities, and an assessment of performance drawing on numerous indicators. The report highlights two key thematic areas: gender equality and empowerment of women (the third MDG) and the special problems of fragile states, where extreme poverty is increasingly concentrated. The report is available here.
    Order the publication

  • Services Trade and Development: The Experience of Zambia, Aaditya Mattoo and Lucy Payton, a Palgrave Macmillan / World Bank publication, May 2007
    Services are critical to Zambia's overall economic performance and the well-being of its people, and the constraints on service sector development due to small markets and limited endowments could be alleviated by greater regional and global integration. International negotiations can be harnessed to deliver much-needed reform, but there is also a danger that unbridled mercantilism could produce outcomes that are antithetical to development. A key rationale for this volume was to ensure that policy makers and trade negotiators in a least developed country like Zambia are fully informed about both the opportunities for expanding trade in services - unilaterally, regionally, multilaterally - and the domestic pre-conditions for successful services liberalization.

Recent Publications

  • Dancing with Giants: China, India and the Global Economy, Edited by Alan Winters, Shahid Yusuf, 2007
    This book examines the global implications of India and China’s growth. China is now the world's fourth largest economy and growing very fast. India's economic salience is also on the rise. Together these two countries will profoundly influence the pace and nature of global economic change. Drawing upon the latest research, this volume analyzes the influence of these two countries and examines how their growth is likely to impinge upon other countries. It considers international trade, industrialization, foreign investment and capital flows, and the implications of their broadening environmental footprints. It also discusses how the two countries have tackled poverty, inequality and governance issues and whether progress in these areas will be a key to rapid and stable growth.
    This book, edited by L. Alan Winters and Shahid Yusuf, contains six essays and an introduction that explore whether the Giants’ continued rapid growth through 2020 is feasible, whether there are any hints about the form it will take, and how any such expansion will impinge on other countries. It is produced by the World Bank's Development Research Group with support from its East Asia and Pacific and South Asia Regions, and the Institute of Policy Studies (IPS), Singapore.
    More information  |  Order the publication

  • Trade Preferences and Differential Treatment of Developing Countries, Edited by Bernard Hoekman and Caglar Ozden, Edward Elgar Ltd., 2007
    Nonreciprocal trade preferences and provisions in the GATT/WTO that allow developing countries greater leeway to retain or use protectionist policies are two of the central planks of so-called special and differential treatment (SDT) for developing countries in the multilateral trading system. The authors survey the literature on the rationales, institutional features, and economic effectiveness of SDT. A large literature has emerged on SDT in the past 50 years, by both proponents and opponents. This book summarizes a number of key contributions on the subject, with a special emphasis on the evaluation of the impact of SDT, especially preferential market access. The issue of SDT has become very topical again, following a period during which it was viewed as an outdated concept for the multilateral trading system. The authors therefore devote attention as well to a number of recent contributions that discuss (1) whether there is a continued need for SDT, and (2) how this might be designed from both a development (recipient) objective and from the perspective of the trading system more generally. More information and selected downloadable papers are available here.

 

Trade Note Series

Trade Note 31: Financial Services Liberalization and Trade Agreements in Latin America and the Caribbean (pdf - 165k)

This note analyzes the trade liberalization of financial services via Preferential Trade Agreements that was undertaken by countries in the Latin America and Caribbean Region (LCR). It shows particularly that LCR countries have used PTAs primarily to consolidate and ‘lock in’ existing unilateral liberalization rather than as means to actively promote further market opening and domestic regulatory reforms. It also shows that many de novo liberalization commitments are actually not preferential in nature, while there is no architectural model preferable for the liberalization of financial services.


Of Note…

  • On April 14-15, 2007, the World Bank and the Fund will hold their Spring meetings in Washington, DC, to discuss progress on the work of the Fund and Bank. Around these meetings, the World Bank and the IMF organize a number of forums to facilitate the interaction of governments and Bank-IMF staff with non-governmental organizations (NGOs), journalists, and the private sector. For more information, please visit the official website.

  • On March 1, 2007 and as part of the Bretton Woods Committee outreach activities, the Bank’s trade team met with representatives from the US business community with an interest in international business and development issues to discuss the trade agenda, developing countries and the World Bank’s role.

Recent Policy Research Working Papers

These papers, and all older papers, are also available using the  Document Search on the Bank's Development Economics Research website and on the  Social Sciences Research Network.

  • 4180The Role of Services in Rural Income: The Case of Vietnam (Aylin Isik-Dikmelik and M. Ataman Aksoy),  March 2007

    This paper investigates the role of services in the household response to trade reforms in Vietnam. It focuses on services that have an impact on transaction costs (roads or quality of roads, public transportation, access to credit, extension services, and availability of markets in communication services) because transaction costs are often cited as a barrier to rural households in responding to the price changes and increased incentives offered by trade and other policy reforms. The results suggest that availability of production related services contributes positively to the impact of trade reforms. Although most of the service variables have a positive and significant effect on growth in income, some that are expected to have an impact are not significant. This may be explained by the exceptional coverage of infrastructure services in Vietnam even before the reforms. When service availability is very similar across different localities, household characteristics become more important in determining the response.

  • 4153: The Impact of Trade with China and India on Argentina's Manufacturing Employment(Lucio Castro, Marcelo Olarreaga and Daniel Saslavsky), March 2007

    For many in Latin America, the increasing participation of China and India in international markets is seen as a looming shadow of two "mighty giants" on the region's manufacturing sector. Are they really mighty giants when it comes to their impact on manufacturing employment? The authors attempt to answer this question by estimating the effects of trade with China and India on Argentina's industrial employment. They use a dynamic econometric model and industry-level data to estimate the effects of trade with China and India on the level of employment in Argentina's manufacturing sector. Results suggest that trade with China and India only had a small negative effect on industrial employment, even during the swift trade liberalization of the 1990s.

  • 4104Road infrastructure in Europe and Central Asia: Does network quality affect trade? (Ben Shepherd and John S Wilson), December 2006

    The authors present a new database of minimum distance road routes connecting 138 cities in 27 countries across Europe and Central Asia. They use it to show that improved road network quality is robustly associated with higher intraregional trade flows. Gravity model simulations suggest that an ambitious but feasible road upgrade could increase trade by 50 percent over baseline, exceeding the expected gains from tariff reductions or trade facilitation programs of comparable scope. Cross-country spillovers due to overland transit are important: total intraregional trade could be increased by 30 percent by upgrading roads in just three countries-Albania, Hungary, and Romania.

  • 4094Are lives a substitute for livelihoods? Terrorism, security, and U.S. bilateral imports (Daniel Mirza, Thierry Verdier), December 2006

    That is the impact of terrorism on trade through higher security at the borders? The authors set up a theory which shows that the impact goes not only from terrorism to trade. Higher trade with a partner might, in turn, increase the probability of terrorism acts and make security measures more costly for total welfare. To identify the true impact of terrorism, their theory allows for a strategy to condition out the latter mechanism. The authors show in particular how past incidents perpetrated in third countries (anywhere in the world except the origin or targeted country) constitute good exogenous factors for current security measures at the borders. Their tests suggest that terrorist incidents have a small effect on U.S. imports on average, but a much higher effect for those origin countries at the top of the distribution of incidents. The authors further show how terrorism affects the number of business visas given by the United States, thereby affecting significantly U.S. imports in differentiated products. These results suggest that security to prevent terrorism does matter for trade.

  • 4062Growth before and after trade liberalization (Gonzalo Salinas, Ataman Aksoy), November 2006

    The empirical study of the impact of trade liberalization has not convinced the skeptics about the economic gains after trade reforms. Some have even argued that trade reforms have led to economic collapse and to deindustrialization. Using a sample that excludes countries that were subject to major exogenous disruptions, the authors note that post-reform economic growth was 1.2 percentage points higher than before the reforms. This is remarkable considering that pre-reform periods were characterized by highly expansionary state policies and large external borrowing, and the crisis years that preceded trade liberalization in the comparisons are eliminated. Growth acceleration occurred irrespective of income per capita level and was quite significant in Sub-Saharan Africa. As expected, small countries benefited most from the reforms.

  • 4049Trade reforms and welfare: an ex-post decomposition of income in Vietnam (Aylin Isik-Dikmelik), October 2006

    This paper analyzes the impact of trade reforms on household welfare. In particular, it studies the importance of each of the links that together constitute the impact using data from the Vietnamese experience in the 1990s. The implementation of trade reforms in the 1990s, most noteworthy of which was the liberalization of rice, resulted in substantial improvement in welfare as evidenced by the drastic decline in poverty. Using analytical and empirical methods, the author examines the role of each channel (direct versus indirect) in this improvement for different groups of households. Results indicate that the growth has been broad based and pro-poor. Poorer households experienced more growth for each and every group analyzed. And contrary to the standard literature, net buyer households had more growth compared with net sellers, emphasizing the importance of indirect links. Decomposition of the growth shows that for rural households, both the direct effect and the multiplier effect drive growth while the multiplier effect was key in urban areas.

  • 4047Unraveling the worldwide pollution haven effect (Jaime de Melo, Nicole A Mathys and  Jean-MarieGrether), October 2006

    This paper contributes to the debate on the existence of pollution haven effects by systematically measuring the pollution content of trade (measured by the pollution content of imports, PCI) and decomposing it into three components-a "deep" component (unrelated to the environmental debate but including variables traditionally present in the gravity model) and two components (factor endowments and environmental policies) that occupy center stage in the debate on trade and the environment. The decomposition is carried out for 1986-88 for an extensive data set covering 10 pollutants, 48 countries, and 79 ISIC 4-digit sectors. In sum, although the impact has been stronger on vertical (North-South) trade flows, differences in factor endowments and environmental policies have only marginally affected the pollution content of world trade during the 1986-88 period.

  • 4032Do institutions matter more for services? (Mohammad Amin and Aaditya Mattoo), October 2006

    Recent empirical research has focused on the role of institutions in overall economic performance. This paper examines the impact of institutions on the relative performance of the service sector. Through cross-country level and growth regressions it establishes the following stylized fact: countries with better institutions have relatively larger and more dynamic service sectors. It suggests that regulatory and contract enforcing institutions play a key role in the development of service sectors because these sectors enter into a more complex web of transactions with the rest of the economy and are more prone to market failure due to asymmetric information.

  • 4030Liberalizing trade in services: a survey (Bernard Hoekman) October 2006

    Since the mid 1980s a substantial amount of research has been undertaken on trade in services. Much of this is inspired by the World Trade Organization or regional trade agreements, especially the European Union, but an increasing number of papers focus on the impacts of services sector liberalization. This paper surveys the literature, focusing on contributions that investigate the determinants of international trade and investment in services, the potential gains from greater trade (and liberalization), and efforts to cooperate to achieve such liberalization through trade agreements. It concludes that there is increasing evidence that services liberalization is an important source of potential welfare gains, but relatively little research has been done that can inform the design of international cooperation-both trade agreements and development assistance-so as to more effectively promote development objectives.

Upcoming Courses

  • Trade Policy for Development Executive Course, Columbia University (SIPA) and World Bank Institute, April 30 – May 18, 2007
    The School of International and Public Affairs (SIPA) at Columbia University and the World Bank Institute (WBI) will be offering a new "flagship" trade course from April 30 to May 18, 2006, with two weeks on the Columbia campus in NYC followed by a week at the Bank in DC. This fee-based course, titled "Trade Policy for Development Executive Course" will cover the entire trade policy and negotiating agenda, emphasizing its economic and development implications, and is intended mainly for middle to senior level government officials, their advisors, and representative of business associations from developing countries. However, the course will be open also to staff from international organizations, donors, and governments and civil society in developed countries.   A ceiling of 40 participants has been set to ensure a high level of instructional quality and interaction among the participants. Participants will be issued a certificate of course completion issued jointly by SIPA and WBI. Lecturers will be drawn from the trade experts in the economics and other departments at Columbia University, in the Bank's International Trade Department staff, and at other selected institutions. 

Useful information
The cost of attending this three-week long course will consist of mandatory tuition fees of $5,700, optional accommodation charges of $3,900 if accommodation is requested through SIPA and WBI, and travel-related expenses.  The cost of attending this three-week long course is comparable to the cost of attending Harvard's KSG two-week long executive course on trade policy. Unfortunately, no scholarships or tuition waivers are available to offset such costs.  Participants are expected to identify and obtain the required funding for all travel, meals, accommodation, and tuition from their employers or from local development agencies and aid donors that have ongoing programs of trade-related technical assistance and may be able and interested in sponsoring training abroad.  

The full course announcement with a first list of selected faculty, contact information, and more details is attached.  Moreover, a preliminary course and application website can be found at: http://www.worldbank.org/wbi/trade/policy_executive_course


For the Record

  • Doha Development Agenda (DDA), Director-General’s Consultative Framework Mechanism on Cotton, High-Level Session” - March 15-16, 2007, Geneva, Switzerland.

    In an effort to take stock of initiatives taken to fulfill the mandate of dealing with cotton ambitiously, expeditiously and specifically within the Doha round, high-ranking officers from cotton producing countries, donors, other WTO members and international organizations (including UNCTAD Director-General Supachai Panitchpakdi and UNIDO Director-General Kandeh Yumkella) gathered at the High Level Session of the Consultative Framework on Cotton on 15-16 March in Geneva. The World Bank was represented by John McIntire, Senior Adviser, Africa region.

    During the meeting, it became evident that even though views are differing over how much rich country subsidies of the cotton sector is hurting cotton producers in the Cotton-4 (Benin, Burkina Faso, Mali, Chad), removal of these subsidies is likely to have a positive impact on cotton prices; there is no meeting of minds on the idea of establishing an emergency fund to deal with macroeconomic and financial problems due to the long-term fall in cotton prices; there is a large gap between the funds that are made available and those that have so far been used on the ground; and there is a need for improved coherence of development assistance provided to economies where cotton has vital importance. The cotton-producing countries continue to call for an establishment of a "safety net" (emergency fund) to deal with the downward facing prices of cotton. At the outset of the meeting, Director-General Pascal Lamy noted that there is no meeting of minds regarding budgetary compensation.
    Key issues being discussed were the D-G Lamy's table with available data on development assistance in the cotton sector of the Cotton-4; cotton-producers' as well as donors' view of the assistance provided; price fluctuations and how to deal with the consequences of falling cotton-prices; the status of the trade side of cotton in the ongoing negotiations; and ongoing reforms in the cotton-producing countries. In his closing remarks, Lamy concluded that there is an urgent need for a solution to the problem facing the cotton-producing countries in West Africa, and that finding a solution to the problems facing cotton producers in West Africa will be a test of the Doha Development Round itself. More information is availableat the WTO website.

  • The World Bank’s assistance to Cotton-4 countries
    The Bank is working with other donors and agencies to assist countries by reducing their vulnerability to cotton price fluctuations. We have active programs in the “Cotton 4” countries (Benin, Burkina Faso, Chad, Mali), as well as regional and other schemes.
    • The Bank is helping cotton producers increase their competitiveness, though further domestic sectoral reform, strengthened producer associations, upgraded research capacity and consideration of biotech cotton.
    • The Bank is encouraging diversification, including into traditional cereals and cash crops.
    • And the Bank is also addressing their vulnerability to price shocks, exploring crop insurance and national and regional price risk management instruments.



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