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Trade and Development Quarterly: The Global Dialogue

This thirteenth edition contains:

Books and Reports

  • Global Trade and Poor Nations, The Poverty Impacts and Policy Implications of Liberalization, edited by Bernard M. Hoekman and Marcelo Olarreaga, and introduction by Ernesto Zedillo, 2007

    This thoughtful volume assesses the likely impact of reformed trade policies on the poorest of the poor - those on the bottom economic rungs in developing nations. The focus on a spectrum of poor nations across different regions provides some helpful and hopeful guidelines regarding the likely impacts of a global trade reform, agreed upon under the auspices of the World Trade Organization, as well as the impact of such reforms on economic development. In order to facilitate lesson-drawing across different regions, each country study utilizes a similar methodology. They combine information on trade policy at the product level with income and consumption data at the household level, thus capturing effects both on the macro level and in individual households where development policies ideally should improve day-to-day life. This uniformity of research approach across the country studies allows for a deeper and more robust comparison of results. More information >>

  • International Migration, Economic Development and Policy edited by Caglar Ozden and Maurice Schiff, 2007

    This volume adds to the first one  published in 2005 by expanding the country coverage and providing thinking on new topics such as the gender-differentiated impact of migration and remittances; the impact of migration on fertility rates in the country of origin; and temporary/return migration. In part 1, three chapters examine the impact of migration and remittances on development indicators in Pakistan and twelve Latin American and Caribbean countries, and one examines an entirely new topic—the impact of international migration on birth rates and the extent of the demographic transition in the migrants’ countries of origin, with focus on Egypt, Morocco and Turkey. Part II consists of two chapters dealing with host country policies and their impact on migrants (New Zealand and Switzerland). In Part III, one chapter examines the determinants of return and repeat migration in Norway, and the second looks at the degree of success and the occupational choice of return migrants relative to non-migrants with similar profiles in Egypt.  More information >>

Trade Notes

Using a new dataset the EU has recently made available, the author calculated the value of preferences for 13 sub-Saharan non-LDC countries, taking into account current preference utilization. Findings indicate that preferences amount to a substantial share of total exports for three countries (Mauritius, the Seychelles, and Swaziland) and exceed five percent of exports for another four countries. However, the value of preferences for non-LDCs would fall to 0.5 percent if no new trading arrangements were in place in 2008, when Cotonou preferences expire.


World Bank Working Papers

Transparency and Trade Facilitation in the Asia Pacific: Estimating the gains from reform, by Helble, Shepherd, and Wilson, Development Research group, 2007

This World Bank-APEC trade research paper highlights that improving the transparency of trade policy is also a critical aspect of trade facilitation and any structural reform agenda that interfaces with regional or global integration goals. Despite the central role of transparency in support of economic development and trade, this report is the first attempt to comprehensively evaluate the relative impact of transparency and related trade facilitation measures. The paper's findings suggest that in moving forward, there is considerable scope for APEC to consolidate and build on progress already made in the area of transparency and trade facilitation. Within APEC’s framework of regional cooperation, it will be important for policymakers and stakeholders to develop both a set of substantive goals and concrete policy options that can be implemented with these priority areas in consideration. Mobilizing the financial and technical resources necessary to ensure that any such reform program is feasible and sustainable across such a diverse regional grouping will require member economies to once again demonstrate the creativity and flexibility for which APEC is so noteworthy. More information |  Download the study 


WPS 4339
 - Developing economies and international investors: do investment promotion agencies bring them together? Torfinn Harding, Beata Smarzynska Javorcik

This study uses newly collected data on national investment promotion agencies in 109 countries to examine the effects of investment promotion on foreign direct investment inflows. The empirical analysis follows two approaches. First, it tests whether sectors explicitly targeted by investment promotion agencies receive more foreign direct investment in the post-targeting period relative to the pre-targeting period and non-targeted sectors. Second, it examines whether the existence of an investment promotion agency is correlated with higher foreign direct investment inflows. Results from both approaches point to the same conclusion. Investment promotion efforts appear to increase foreign direct investment inflows to developing countries. Moreover, agency characteristics, such as the agency's legal status and reporting structure, affect the effectiveness of investment promotion. There is also evidence of diversion of foreign direct investment due to investment incentives offered by other countries in the same geographic region.


WPS 4337 - Canada-Wheat: discrimination, non-commercial considerations, and state trading enterprises, Bernard Hoekman, Joel Trachtman

This paper assesses a recent dispute brought by the United States against Canada, alleging that WTO rules require state trading enterprises to operate solely in accordance with commercial considerations and that the Canadian government did not require the Canadian Wheat Board to do so. The panel and Appellate Body found that the primary discipline of the WTO regarding state trading enterprises was nondiscrimination, and that operating on the basis of "commercial considerations" was not an independent obligation. Instead, WTO disciplines regarding the pricing behavior of state trading enterprises use a "commercial considerations" test as a possible indicator of discrimination. Although a significant degree of price discrimination is observed in the case of Canadian wheat exports, there are economic arguments why this might also be pursued by a private, profit maximizing firm.

WPS 4336 - European Community - Sugar: cross-subsidization and the World Trade Organization,  Bernard Hoekman, Robert Howse

An important recent WTO dispute settlement case for many developing countries concerned European Union (EU) exports of sugar. Brazil, Thailand, and Australia alleged that the exports have substantially exceeded permitted levels as established by EU commitments in the WTO. This case had major implications for both EU sugar producers and developing countries that benefited from preferential access to the European Union market. It was also noteworthy in the use of economic arguments by the WTO dispute settlement panel, which held that the excess sugar exports were in part a reflection of illegal de facto cross-subsidization-rents from production that benefited from high support prices being used to cover losses associated with exports of sugar to the world market. Although in principle the economic arguments of the panel could apply to many other policy areas, in practice WTO provisions greatly limit the scope to bring similar arguments for trade in products that are not subject to explicit export subsidy reduction commitments of the type that were made for sugar and other agricultural commodities.

WPS 4320 - The growth of China and India in world trade: opportunity or threat for Latin America and the Caribbean? Daniel Lederman, Marcelo Olarreaga, Isidro Soloaga

This paper studies the relationship between the growth of China and India in world merchandise trade and Latin American and Caribbean (LAC) commercial flows from two perspectives. First, the authors focus on the opportunity that China and India's markets have offered LAC exporters during 2000-2004. Second, empirical analyses examine the partial correlation between Chinese and Indian bilateral trade flows and LAC trade with third markets. Both analyses rely on the gravity model of international trade. Results suggest that the growth of the two Asian markets has produced large opportunities for LAC exporters, which nevertheless have not been fully exploited. The evidence concerning the effects of Chinese and Indian trade with third markets is not robust, but there is little evidence of negative effects on LAC exports of non-fuel merchandise. In general, China's and to a large extent India's growing presence in world trade has been good news for LAC, but some of the potential benefits remain unexploited.

WPS 4319 - Product innovation by incumbent firms in developing economies: the roles of research and development expenditures, trade policy, and the investment climate, Daniel Lederman

A model of firm innovation illustrates the effects of the threat of imitation and product varieties on a representative firm's decision to invest in research and development to produce new product varieties. The model motivates two empirical questions: (1) Is research and development partially correlated with firms' propensity to introduce new products or product innovation in developing countries? (2) Do trade policies and the national investment climate affect firms' propensity for product innovation? The econometric evidence suggests that the answers are yes and yes, but the investment climate affects product innovation in a manner that is consistent with the presence of market failures and state capture. National trade-policy distortions appear to reduce the probability of product innovation, and the density of exporting firms at the national level also seems to positively affect the propensity to introduce new products by individual firms. The paper discusses some policy implications.

WPS 4318 - Specialization and adjustment during the growth of China and India: the Latin American experience, Daniel Lederman, Marcelo Olarreaga, Eliana Rubiano

This paper examines the extent to which the growth of China and India in world markets is affecting the patterns of trade specialization in Latin American economies. The authors construct Vollrath's measure of revealed comparative advantage by 3-digit ISIC sector, country, and year. This measure accounts for both imports and exports. The empirical analyses explore the correlation between the revealed comparative advantage of Latin America and the two Asian economies. Econometric estimates suggest that the specialization pattern of Latin A-with the exception of Mexico-has been moving in opposite direction of the trade specialization pattern of China and India. Labor-intensive sectors (both unskilled and skilled) probably have been negatively affected by the growing presence of China and India in world markets, while natural resource and scientific knowledge intensive sectors have probably benefited from China and India's growth since 1990.

WPS 4304 - China, India, and the future of the world economy: fierce competition or shared growth?  Betina Dimaranan, Elena Ianchovichina, William J. Martin

Although both China and India are labor-abundant and dependant on manufactures, their export mixes are very different. Only one product -refined petroleum- appears in the top 25 products for both countries, and services exports are roughly twice as important for India as for China, which is much better integrated into global production networks. Even assuming India also begins to integrate into global production chains and expands exports of manufactures, there seems to be opportunity for rapid growth in both countries. Accelerated growth through efficiency improvements in China and India, especially in their high-tech industries, will intensify competition in global markets leading to contraction of the manufacturing sectors in many countries. Improvement in the range and quality of exports from China and India has the potential to create substantial welfare benefits for the world, and for China and India, and to act as a powerful offset to the terms-of-trade losses otherwise associated with rapid export growth. However, without efforts to keep up with China and India, some countries may see further erosion of their export shares and high-tech manufacturing sectors.

WPS 4285 - Poverty analysis using an international cross-country demand system, J. A. L. Cranfield, Paul V Preckel, Thomas W. Hertel

This paper proposes a new method for ex ante analysis of the poverty impacts arising from policy reforms. Three innovations underlie this approach: (1) the estimation of a global demand system using a combination of micro-data from household surveys and macro-data from the International Comparisons Project (ICP); (2) a methodology for post-estimation calibration of the global demand system, giving rise to country-specific demand systems and an associated expenditure function which, when aggregated across the expenditure distribution, reproduce observed per capita budget shares exactly; and (3) the establishment of a unique poverty level of utility and an appropriately modified set of Foster-Greer-Thorbecke poverty measures. With these tools in hand, the authors are able to calculate the change in the head-count of poverty, poverty gap, and squared poverty gap arising from policy reforms, where the poverty measures are derived using a unique poverty level of utility, rather than an income or expenditure-based measure. They use these techniques with a demand system for food, other nondurables and services estimated using a combination of 1996 ICP data set and national expenditure distribution data. Results illustrate the important role of subsistence expenditures at lowest income levels, but of discretionary expenditure at higher income levels. The welfare analysis underscores the relatively large impact of the price hike on poorer households, while a modified Foster-Greer-Thorbecke poverty measure shows that the 5 percent price rise increases the incidence and intensity of poverty in all three cases, although the specific effects vary considerably by country.


Upcoming Courses

The WBI - 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.    Please follow the “training” link on http://www.worldbank.org/trade for updates on final delivery dates and application links for these courses.
The programmed global E-learning courses for this period are:

  • Trade in Services and International Agreements, October 22nd - December 14, 2007 and running over eight weeks.  Deadline for application is Oct. 1st. 
    Application form
  • Global E-learning Course: Trade, Growth and Poverty, January 14th - February 29th 2008. 
    Application form 
  • Global E-learning Course: Trade and Gender, January 14th - February 1st 2008. 
    Application form
  • Global E-Learning Course: Export Development and Diversification, January - March 2008. Application forms and links available starting in November.
  • Global E-Learning Course: Food and Agricultural Trade, February - March 2008. Application forms and links available starting in December
  • Global E-Learning Course: Standards and Trade: Challenges and Opportunities, Spring 2008

For the Record

Conference on “Multilateralising Regionalism”, September 10 - 12, 2007, Geneva, Switzerland.

The two-day conference was sponsored and organized by the WTO, the Graduate Institute of International Studies (HEI), and CEPR with funding by the World Bank amongst others. The conference was dedicated to exploring the consequences for future trade relations of a continued splintering of trading arrangements into dozens of often overlapping and potentially inconsistent agreements. In particular, the conference aimed to clarify the relationship between regionalism and the multilateral trading system - how regional trade agreements might be tamed through a multilaterally based approach to redefining trade cooperation and what, if any, is the role of the WTO.

Thirteen academic papers were centered around three themes:

  1. Multilateralism that has already occurred (European approach to rules of origin, information technology agreement);
  2. Regional perspectives on multilateralizing RTAs including the effects on developing countries;
  3. Extending the tariff-driven framework to non-tariff measures and services.

The question also posed to researchers was whether the WTO should continue to act as a passive observer or whether it should take a more active role. The consensus seemed to be that the WTO needed to take steps to address the situation.

Director General Pascal Lamy chaired the final roundtable session which included Professor Jagdish Bhagwati, Professor Richard Baldwin, Ambassador Balihuta (Uganda and Head of African Group), Ambassador Glenne (Norway), Ambassador Matus (Chile), and Ambassador Zhenyu (PRC). The DG concluded that: a) Regionalism is here to stay – both for structural and political reasons; b) Perhaps more needs to be done to address the systemic issues; and c) Members themselves needed to debate the tension and incoherence between multilateral and regional agreements at home. Draft conference papers.