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Trade and Development Quarterly: The Global Dialogue

This twelfth edition contains:

Books and Reports

  • From Competition at Home to Competing Abroad: A Case Study of India’s Horticulture
    By Aaditya Mattoo, Deepak Mishra and Ashish Narain, A co-publication of Oxford University Press and the World Bank, 2007.

This report examines the paradox that while India is a large, low cost agricultural producer, its share in global agriculture exports is minuscule. India produces nearly 11 per cent of all the world’s vegetables and 15 per cent of all fruits, yet its share in global exports of vegetables is only 1.7 per cent and in fruits a meager 0.5 per cent. Based on an integrated analysis of the sector - from farm to market - on the basis of primary surveys of farmers, agents, and exporters across fifteen Indian states, the report lists three major factors that are undermining India’s potential for reaching supermarkets across the globe: (i) The high delivery costs of getting agricultural produce from farm to market; (ii) The existence of a huge gap between the health, safety, and quality standards required abroad and the weak standards and assessment mechanisms in India; and (iii) Pernicious forms of trade protection and a system of special safeguards that is a source of considerable uncertainty for successful exporters. More information...

  • 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. More information...


Of Note...

  • New Dataset  Overall Trade Restrictiveness Indices(2007 updates)
    This database provides indicators of trade restrictiveness that include both measures of tariff and non-tariff barriers. The database covers 72 developing and developed countries plus the European Union. For each country there are estimates of three trade restrictiveness indices. The first index captures the extent to which trade policies at home affect domestic welfare. The second index captures the impact of trade distortions on each country’s import bundle. The third index summarizes the trade distortions imposed by the rest of the world on each country’s export bundle. Each of these indices is provided for the broad aggregates of manufacturing and agriculture products.

  • Upcoming  World Trade Indicators
    The World Bank Institute (WBI) is currently preparing a new interactive database application, the World Trade Indicators (WTI), designed to benchmark a country’s trade performance. This new interactive website is expected to be open to the public this Fall.

    The aim of this initiative is to help policy makers, advisors, and analysts identify the main border and behind-the border constraints to trade integration by:
    • enhancing country awareness of the different policy factors--such as tariffs and behind the border constraints--that work together to influence trade outcomes in a particular country;
    • providing incentives for reform (bolstering the demand for reform) by benchmarking and highlighting a country's position relative to competitors; and
    • allowing systematic comparisons over time to refine policy (once the process is repeated for more time periods)

The WTI database is organized around five thematic pillars, namely Trade Policy, External Environment, Institutions and Business Environment, Trade Facilitation and Trade Outcome.   Each pillar contains a main, representative indicator, as well as other reference indicators.  Countries' trade performance can be examined both individually and in relation to country groupings to which they belong or to which they compare their performance.  This online tool displays country rankings for five main trade-related indicators and allows users to view rankings and values (latest and historical) for a large set of underlying indicators, based mainly on existing databases.  

For additional information regarding this project, please contact Gianni Zanini at: gzanini@worldbank.org


World Bank Working Papers

  • 4276 Human Capital, Trade Liberalization and Income Risk, by Tom Krebs, Pravin Krishna, and William Maloney

    Using data from Mexico, the authors study empirically the link between trade policy and individual income risk and the extent to which this varies across workers of different human capital (education) levels. They use longitudinal income data on workers to estimate time-varying individual income risk parameters in different manufacturing sectors in Mexico between 1987 and 1998, a period in which the Mexican economy experienced substantial changes in trade policy. In a second step, they use the variations in trade policy across different sectors and over time to estimate the link between trade policy and income risk for workers of varying education levels. The authors' findings are as follows. The level of openness of an economy is not found to be related to income risk for workers of any type. Furthermore, changes in trade policy (that is, trade policy reforms) are not found to have any effect on the risk to income faced by workers with either low or high levels of human capital. But workers with intermediate levels of human capital are found to experience a statistically and economically significant increase in income risk immediately following liberalization of trade. The findings thus point to an interesting non-monotonicity in the interaction between human capital, income risk and trade policy changes.

  • 4273 Rules of origin and the web of East Asian free trade agreements, by Miriam Manchin and Annette O. Pelkmans-Balaoing, July 2007

    The authors provide an overview of the preferential rules of origin in East Asia, highlighting the aspects that might possibly generate some trade-chilling effects. They review characteristics of existing preferential trade agreements with special emphasis on lessons from the European experience, and analyze some important features of the existing rules of origin in East and South-East Asian regional integration agreements. The empirical analysis of the effectiveness of preferentialism on intra-regional trade flows focuses on the ASEAN Free Trade Area (AFTA), with the aim of providing a rough estimate of the costs of requesting preferences. The results suggest that preferential tariffs favorably affect intra-regional imports only at very high margins (around 25 percentage points). This points to the likelihood of high administrative costs attached to the exploitation of preferences, particularly with regard to the compliance with AFTA's rules of origin.

  • 4265 The Structure of Import Tariffs in the Russian Federation: 2001-05, by David Tarr and Oleksandr Shepotylo, June 2007

    The Russian tariff structure contains over 11,000 tariff lines of which about 1,700 use the so-called "combined" tariff rate system. For the combined system tariff lines, the actual tariff applied by Russian customs is the maximum of the ad valorem or specific tariff. The lack of available data and the difficulty in calculating the ad valorem equivalence of the specific tariffs have resulted in some previous efforts that have simply ignored the specific tariffs. This is the first paper to accurately assess the tariff rates. The authors show that ignoring the specific tariffs results in an underestimate of the actual tariff rates by about 1 to 3 percentage points, depending on the year. The average tariff in Russia has increased between 2001 and 2003 from about 11.5 to between 13 and 14.5 percent, but it has held steady in 2004 and 2005. This places Russia's tariffs at a level slightly higher than other middle-income countries and considerably higher than the OECD countries. The trade weighted standard deviation of the tariff approximately doubled from 9.5 percent in 2001 to 18 percent in 2003, but then fell to 15.2 percent by 2005. The food sector and light industry are the aggregate sectors with the highest tariff rates-their tariff rates in 2005 were 23.1 percent and 19.5 percent on a trade-weighted basis, but the increase in their tariffs has not led to an increase in their output.

  • 4258 The cost of being landlocked: logistics costs and supply chain reliability, by Jean-François Arvis, Gael Raballand, Jean-François Marteau, June 2007

    A large proportion of the least developed countries are landlocked and their access to world markets depends on the availability of a trade corridor and transit systems. Based on empirical evidence from World Bank projects and assessments in Africa, Central Asia, and elsewhere, this paper proposes a microeconomic quantitative description of logistics costs. The paper theoretically and empirically highlights that landlocked economies are primarily affected not only by a high cost of freight services but also by the high degree of unpredictability in transportation time. The main sources of costs are not only physical constraints but widespread rent activities and severe flaws in the implementation of the transit systems, which prevent the emergence of reliable logistics services. The business and donor community should push toward implementation of comprehensive facilitation strategies, primarily at the national level, and the design of robust and resilient transport and transit regimes. A better understanding of the political economy of transit and a review of the implementation successes and failures in this area are needed.

  • 4234 Immigrant Overeducation: Evidence from Denmark, by Chantal Pohl Nielson, May 2007

    Anecdotes abound in the Danish public debate about well-educated immigrants that are in jobs they are formally overqualified for. Using a 1995-2002 panel dataset based on Danish registers, this study attempts to find out how large a problem immigrant overeducation is in the context of the Danish labor market. More specifically, three questions are posed: First, to what extent are immigrants overeducated and are they more likely to be so than native Danes? Second, why are some immigrants more likely to become overeducated than others? And finally, what are the consequences of overeducation for individual wages? The authors find that among wage earners with at least a vocational education or higher, 25 percent of male non-Western immigrants are overeducated. The same applies for 15 percent of native Danes. Particularly immigrants with a foreign-acquired education risk becoming overeducated - here the share is 30 percent among those with a vocational education or higher. The authors find that Danish labor market experience is extremely important in reducing the likelihood of becoming overeducated. Years spent in the country without accumulating labor market experience do not improve an individual's chances of an appropriate job-to-education match. In terms of earnings consequences, the study concludes that years of overeducation do increase wages for immigrants, but much less so than years of adequate education. This is also true for native Danes, but the relative penalty for overeducation is much larger for immigrants than for Danes.

  • 4220 Evaluating the Trade Effect of Developing Regional Trade Agreements: A Semi-Parametric Approach, by Souleymane Coulibaly, May 2007

    Many recent papers have pointed to ambiguous trade effects of developing regional trade agreements (RTAs), calling for a reassessment of their economic merits. This paper focuses on seven such agreements currently in force in Sub-Saharan Africa (ECOWAS and SADC), Asia (AFTA and SAPTA) and Latin America (CACM, CAN, and MERCOSUR), estimating their impacts on their members' trade flows. Instead of the usual dummy variables for RTAs, the author  proposes a variable taking into account the number of years of membership that involves combining a gravity model with kernel estimation techniques to capture the non-monotonic trade effects while imposing minimal structure on the model. The results indicate that except for SAPTA, these RTAs have had a positive impact on their members' intra-trade during 1960-99 (the estimation period). AFTA seems to be the most successful among them, with an estimated positive impact on its members' imports from the rest of the world (hence no trade diversion), but its impact on their exports to the rest of the world is rather limited. During its first 10 years of existence, ECOWAS appears to have had a positive impact on its members' imports from the rest of the world (hence no trade diversion), but this positive impact vanished over time. SAPTA's negative impact on its members' intra-trade is probably an implicit effect of the India-Pakistan tensions during the estimation period.

  • 4188 Substitutability and Protectionism: Latin America's Trade Policy and Imports from China and India, by Giovanni Facchini, Marcelo Olarreaga, Peri Silva, and Gerald Willmann, April 2007

    The authors examine the trade policy response of Latin American governments to the rapid growth of China and India in world markets. To explain higher protection in sectors where a large share is imported from these countries, they extend the "protection for sale" model to allow for different degrees of substitutability between domestically produced and imported varieties. The extension suggests that higher levels of protection toward Chinese goods can be explained by high substitutability between domestically produced goods and Chinese goods, whereas lower levels of protection toward goods imported from India can be explained by low substitutability with domestically produced goods. The data support the extension to the "protection for sale" model, which performs better than the original specification in terms of explaining Latin America's structure of protection.


Upcoming Courses

The World Bank Institute Trade Unit will be offering in the coming months a number of E-learning Courses targeting global audiences, in addition to customized regional and country courses. Course schedules are not final at this point, but tentative dates are listed below. Please follow the “training” link on http://www.worldbank.org/trade for updates on final delivery dates for these courses.
The programmed courses for this period are:

  • Global E-learning Course: Trade in Services and International Agreements, starting October 22nd, 2007 and running over eight weeks (application accepted starting in September)
  • Global E-learning Course: Trade, Growth and Poverty, October - December 2007, starting end of October and running over eight weeks (application accepted in September)
  • Global E-learning Course: Trade Liberalization and Gender, November 2007, running over three weeks (application accepted in September)
  • Global E-Learning Course: Export Development and Diversification, January - March 2008
  • Global E-Learning Course:  Standards and Trade: Challenges and Opportunities, Spring 2008
  • Global E-Learning Course: Food and Agricultural Trade, February - March 2008


For the Record

  • WTO Regional Workshop for Caribbean Countries: WTO Trade Facilitation Negotiations: Identification of Needs & Priorities, July 9 - 13, 2007 in Port of Spain, Trinidad
    This regional Workshop was organized jointly by the WTO and IDB/INTAL in cooperation with UNCTAD, the World Bank and the World Customs Organization. Participants included trade and customs officials from Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago. This is part of a series of regional workshops. More information on past events...

Through a combination of presentations and interactive working group exercises, the Workshop has three objectives: (i) provide an overview of the WTO Trade Facilitation Negotiations and Members' proposals (TN/TF/W/43/Rev.10);  (ii)  explain how to conduct a self assessment of needs and priorities using a self assessment tool specially designed for the negotiations;  and (iii) explain the preparatory work necessary to carry out a self-assessment.  Practical exercises of each working group will help participants understand how to assess their trade facilitation needs and priorities using a guide developed for this purpose (TN/TF/W/143).  The exercises will also improve their understanding of key issues of the proposals made by WTO Members to the Negotiating Group on Trade Facilitation as well as provide a better overall understanding of the WTO trade facilitation negotiations.

The aim of the Workshop is to train officials to be able to coordinate and lead government and private sector officials involved in international trade in a self-assessment of needs and priorities as required by the WTO trade facilitation negotiation mandate.  By the end of the course, participants will understand how to participate more effectively in the WTO trade facilitation negotiations. They will leave the Workshop with an understanding of the WTO self-assessment "guide" and process and will be ready to undertake preparation for their national needs assessment. Please note that WTO Members and observers must participate in this regional workshop if they plan to request WTO technical assistance in conducting a national needs assessment on trade facilitation. More information...

  • Workshop on Trade Costs, Facilitation, and Economic Development, April 30, 2007, Washington, DC.

    The International Trade Research Team held a workshop on Trade Costs and Facilitation. The workshop presented selected results from policy research papers and output from an on-going project on trade costs and facilitation. The removal of non-tariff barriers and lower trade costs are increasingly recognized as key factors that affect private sector performance. The ability of firms to deliver goods and services on time - at lowest possible costs - is also assumed to be a key determinant of successful integration into the world economy and lifting the poor out of poverty. These factors cover a wide range of issues, including security and trade costs and poverty, regulatory standards as they affect export success, and relative impact of infrastructure upgrades in lowering transactions costs, among many others. The workshop explored trade costs and facilitation based on the overall question: What empirical evidence do we have today on trade facilitation and trade costs and what are the priorities ahead in this area for policy-relevant research? Discussions also centered on data available and needed to support empirical research going forward. Papers presented at the workshop are available from the Trade Costs and Facilitation website.
  • Global Facilitation Partnership Semi-Annual Meeting, hosted by the World Customs Organization, March 16, 2007, Brussels, Belgium.

The Global Facilitation Partnership (GFP) biannual meeting, hosted by the World Customs Organization, took place on March 16, 2007 in Brussels, Belgium. The meeting offered GFP partners (multilateral organizations such as the World Bank - core partner - OECD, WCO; governments, and private sector) an opportunity to jointly assess existing global data sources on indicators of country performance in trade and transport facilitation. Most importantly, it gave participants the opportunity to explore the utility of developing new measurement tools in trade facilitation that can be readily used for assessing and monitoring country progress. The Agenda and Presentations can be found here.

  • WTO National Workshop on Trade Facilitation Self Assessment of Needs in Zambia, February 26 - March 2, 2007

The workshop was organized by the WTO in cooperation with the World Bank and the World Customs Organization and co-funded by the World Bank. This national workshop is the Pilot Project for the identification of needs and priorities for Zambia in the area of trade facilitation.  Participants included government officials from trade and finance ministries, customs and senior officials from other key agencies and private-sector bodies responsible for inter-agency cooperation.

Through a combination of presentations and practical exercises, the Workshop has provided participants with (i) an overview of the WTO Trade Facilitation Negotiation mandate, GATT Articles, and Members' proposals; (ii)  an introduction to the needs assessment process and Self Assessment Guide specially designed for the negotiations by the World Bank, the WCO, the IMF, the WTO Secretariat and other Annex D organizations; (iii) and an explanation on how to organize and prepare for a Needs Assessment. More information...