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Trade and Development Quarterly: The Global Dialogue

Highlights

  • World Bank President Robert Zoellick announced seven new measures to make additional support and resources available for Aid for Trade

    On November 20, 2007, World Bank President Robert Zoellick attended the WTO’s Global Aid for Trade Review.  During the General Council session, Mr. Zoellick addressed Members of the WTO and the international trade community, announcing seven new measures to make additional support and resources available for aid for trade including:
    • Increased support to country programs on trade and competitiveness, including policy analysis, lending and technical assistance. 
    • More resources for trade-related infrastructure.
    • Expanded programs for financing trade through the International Finance Corporation (IFC), the Bank’s private sector arm.
    • Expanded assistance in trade facilitation, including logistics, transport and supply chains.
    • More investments in training and capacity building for policy-makers, particularly in low-income countries, including Geneva-based training with the WTO.
    • Greater work on tools to help countries analyze trade obstacles.
    • Further development of knowledge on how to harness globalization for growth and overcoming poverty, and to inform key trade policy debates.

  • World Bank senior management held high level discussions with the Least Developed Countries in Geneva

    At the request of the least-developed countries (LDCs), the World Bank president Mr. Zoellick (November 20, 2007) and Vice President Danny Leipziger (December 13, 2007) discussed the Bank's trade program and ways in which the Bank can engage more actively in the growth and competitiveness agenda.  The issues discussed related to the problems of cotton for West African producers, private sector development, trade mainstreaming into Bank activities, and desire for greater assistance in the WTO accession process.  Mr. Zoellick stressed that he was trying to expand the Bank’s activities in trade, including through the International Finance Corporation (the World Bank private arm), and that the main tool remained IDA.  Moreover, governments controlled how IDA-resources were used.  The LDCs were pleased with the outcome of the meetings and for having the opportunity to exchange views with the Bank senior management.

    As part of the World Bank Sandwich Seminar Series, Carlos Braga, Senior Adviser, spoke on “The Question of Aid Scaling Up– Where do we stand?” on November 6, 2007, at the World Bank office Geneva. He presented the recent numbers on Official Development Assistance (ODA) and aid-for-trade to a group of 15 donors and LDCs. Braga made the point that donors need to expand the overall envelope of resources for development assistance in order to expand aid-for-trade and make additional resources available for trade-related infrastructure, institutions, and analysis.

    This builds upon an ongoing dialogue between the LDCs and the World Bank Geneva-based offcie. On October 24, at the invitation of the Chair of the LDCs, Richard Newfarmer, World bank Special Representative to the WTO and UN in Geneva, presented the Bank’s aid for trade activities for the WTO’s LDC Group.   The presentation was organized around three basic messages of concern to the LDCs: (i) many LDCs have leveraged global economy for growth, but moving to a high and sustained growth path requires greater efforts to improve competitiveness; (ii) the World Bank has several instruments to support governments, but countries have to decide to avail themselves of this support by making improved competitiveness a pillar of their growth strategies; and (iii) country control of resources and projects is essential to ownership and success.

For The Record

  • WTO First Global Aid for Trade Review - November 20, 2007, Geneva, Switzerland.  The Global Aid-for-Trade Review is the focal point of the WTO's monitoring mandate for 2007. It provides an overview of what is — and what is not — happening in the delivery of Aid-for-Trade, including current flows, existing gaps, and where improvements need to be made. It also aims to create incentives — by shining a “spotlight” on the issues — to deliver more and better Aid-for-Trade, and to strengthen mutual accountability between partner countries and donors. The World Bank was represented by President Robert Zoellick, VP Marwan Muasher, Richard Newfarmer and the Geneva team.

More information, program and presentations can be accessed here >>

The event was preceded by a series of Aid for Trade Regional Reviews organized by the WTO together with regional banks and governments  (Lima, Peru on 13-14 September; Manila, Philippines on 19-20 September; and Dar es Salaam, Tanzania on 1-2 October) and in cooperation with the World Bank. More information >>

  • WTO Technical Review of Aid for Trade, November 19, 2007, Geneva, Switzerland.

    The World Bank was represented by Richard Newfarmer, Special Representative to the WTO and UN in Geneva, and Ali Khadr, Senior Manager. Newfarmer and Khadr participated in three panels to speak about quantitative measures of Aid for Trade, evaluation as part of the qualitative dimensions of Aid for Trade, and mainstreaming trade in low-income countries. The program included discussion on the complexities of measuring Aid for Trade, the need to hold donors accountable for the overall envelope of assistance rather than an ill-defined Aid for Trade number, the complexities and cost of detailed evaluation, and the importance of country ownership for mainstreaming and for regional programs. 

  • Landlocked Developing Countries (LLDC) on-line e-Forum entitled ‘Overcoming the Challenges of Landlockedness’, organized by the UNDP, October 2007-January 2008
    This e-Forum was designed to bring together on-line for the first time all of the LLDCs, and was “moderated” by Richard Newfarmer, World bank Special Representative to the WTO and UN in Geneva, and Krista Lucenti (World Bank) and in conjunction with David Luke of UNDP and Mina Mashayekhi of UNCTAD. More information>>

  • World Bank-OECD Seminar on “Sustainable and Inclusive Development: Going for Growth?” December 5, 2007, Washington, DC.
    Participants discussed aid architecture and Aid for Trade, Innovation and long-term growth, fiscal legitimacy and development, fostering climate resilient development, doing business, and growth. Please see agenda for details.

Of Note

  • The World Bank launched the World Trade Indicators (WTI) on December 19, 2007, in Washington, DC.

    The WTI is a compact, user-friendly, and easily accessible interactive database that contains 126 indicators measuring at-the-border and behind-the-border trade policy performance and outcomes for 208 countries. Drawing from internationally comparable databases and including some new measures of trade policy, the database groups country performance around five main pillars: border protection, such as tariffs and non-tariff barriers on goods and services; constraints to market access in the rest of the world; the overall business and institutional environment; trade facilitation; and trade outcomes, such as trade growth, and diversification. These indicators can be used to benchmark and rank a country’s policy and outcome performance vis-à-vis partners, and current and potential competitors on world markets. More information >>l

The 2008 version and a hard copy report will be launched on June 12, 2008

  • The World Bank launched the Logistics Performance Indicators (LPI) on November 5, 2007 in Washington, DC and on December 13, 2007 in Geneva, Switzerland. It also published a study Connecting to Compete: Trade Logistics in the Global Economy
    The LPI is the first comprehensive cross-country assessment of logistics performance in 150 countries, based on a worldwide survey completed by more than 800 logistics professionals. It aggregates the performance in seven areas, from traditional ones such as customs procedures, logistics costs (including freight rates), and infrastructure quality, to new areas such as the ability to track and trace shipments, timeliness in reaching a destination, and the competence of the domestic logistics industry. More information >>

  • The World Bank’s Geneva office launched the Sandwich Seminar Series - Gerard McLinden, World Bank Senior Trade Facilitation Specialist, inaugurated this new series with a presentation to a group of Least Developed Country (LDC) officials, using the Lao Trade Development Facility project as a case study of effective donor cooperation in support of Diagnostic Trade Integration Study (DTIS) implementation. Mr. McLinden highlighted the Bank’s role in working with the Lao Government to effectively develop the necessary institutions not only for the Integrated Framework but also for the solicitation of additional funds.


Upcoming Courses

Trade Policy for Development course

The School of International and Public Affairs (SIPA) at Columbia University and the World Bank Institute will be offering the 2nd "Trade Policy for Development Executive Course" from June 2nd to June 13th, 2008 with one week on the Columbia campus in NYC followed by a week at the Bank in DC.  

This course will cover the entire trade policy agenda 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, donor agencies, and governments and civil society in developed countries.   We have set a ceiling of 40 participants to ensure a high level of instructional quality and interaction among the participants.  

Lecturers will be among the trade experts at Columbia University, the World Bank, and at other selected institutions.  The full course announcement with a first list of selected faculty and all contact information, and the agenda are attached. 

The tuition fee for attending this two-week long course is $4,500 (plus accommodation charges).

More information >>

E-Learning-Courses

  • Market Access Tools for Export Development

    Date: February 4 - 8, 2008

    Description: This activity will be prepared and delivered in collaboration with the International Trade Center (ITC, Geneva) to build on the wealth of knowledge and experience accumulated by ITC over many years. ITC produces on-line tools and disseminates market research and trade analysis in support of business communities in developing countries.  This part will survey available ITC tools to improve export performance of developing countries on foreign markets

    Target audience: Trade policy makers, advisors, researchers, private sector operators (representatives of agriculture, industry, and services), and export support institutions including Trade Finance banks/institutions in client countries.

    Contact: Salomon Samen, Ssamen@worldbank.org, 202 458 1283

    More information >>
  • Food and Agricultural Trade in Africa

    Date: February 18 - March 14, 2008

    Description: This online course aims to flesh out the key issues that are of special interest to African decision-makers and to cover the strategic agricultural trade issues associated with poverty reduction which are increasingly gaining interest in the region.

    Target audience: African policy makers, senior officials, negotiators, advisors, and analysts (open to experts from other regions).

    Contact: Soamiely Andriamananjara, sandriamananjara@worldbank.org, 202 458 0284

    More information >>

  • Trade Finance Tools for Export Development

    Date: March 3 – 14, 2008

    Description: This activity will help provide a better understanding of trade financing instruments (e.g. Documentary letter of credits, CounterTrade, Factoring , Pre-Shipping and Post-Shipping Financing, Buyers and Suppliers’ credits)  as well as hands-on practical exercises on  Export Credit Insurance (to protect exporters and mitigate the financial impact of risks on the exporter) and Export Credit Guarantees (to protect export financing banks from losses that may occur from providing funds to exporters).

    Target audience: Trade policy makers, advisors, researchers, private sector operators (representatives of agriculture, industry, and services), and export support institutions including Trade Finance banks/institutions in client countries.

    Contact: Salomon Samen, Ssamen@worldbank.org, 202 458 1283

    More information >>


Books and Reports

Global Economic Prospects 2008 – Technology Diffusion in Developing Countries, World Bank, edited by Andrew Burns, January 8, 2008.

Amid heightened interest in the world economy and fear of a US recession, the findings from this year Global Economic Prospects (GEP) provide some comfort in volatile times. The report also shows how rapid technological progress in developing countries has helped to raise incomes and reduce the share of people living in absolute poverty from 29 percent in 1990 to 18 percent in 2004. However, despite these gains, the technology gap between rich and poor countries remains enormous, and the capacity of developing economies to adopt new technology remains weak. The report stresses that the weak diffusion of technology within countries holds back overall technological achievement in many countries. Thus, while major centers and leading firms in Brazil, India and China may operate close to the global technological frontier, most firms in these countries operate at less than a fifth of the top productivity level. According to the report, improving capacity to absorb foreign technology is critical in low-income countries, as well as in those middle-income countries that have exploited low-wage comparative advantages rather than strengthened domestic competencies.

Report and materials are available here >>

A Handbook of International Trade in Services, by Aaditya Mattoo, Robert M. Stern, and Gianni Zannini, January 2008

In light of the increasing importance of international trade in services and the inclusion of services issues on the agendas of the multilateral, regional and bilateral trade negotiations, there is an obvious need to understand the economic implications of services trade and liberalization. A Handbook of International Trade in Services provides a comprehensive introduction to the subject, making it an essential reference for trade officials, policy advisors, analysts, academics, and students. Beginning with an overview on the key issues in trade in services and discussion of the GATS, the book then looks at trade negotiations in the service sector, the barriers to trade in services, and concludes by looking at a number of specific service sectors, such as financial services, e-commerce, health services, and the temporary movement of workers. To purchase the book, plase click here>>

 

World Bank Working Papers

  • 4473Patterns of export diversification in developing countries: intensive and extensive margins, Amurgo-Pacheco, Alberto  ; Pierola, Martha Denisse, January 2008

    This paper uses highly disaggregated trade data to investigate geographic and product diversification patterns across a group of developing nations for the period from 1990 to 2005. The econometric investigation shows that the gravity equation fits the observed differences in diversification across nations. The analysis shows that exports at the intensive margin account for the most important share of overall trade growth. At the extensive margin, geographic diversification is more important than product diversification, especially for developing countries. Taking part in free trade agreements, thereby reducing trade costs, and trading with countries in the North are also found to have positive impacts on export diversification for developing countries.

  • 4464Regionalism and trade facilitation: a primer, Maur, Jean-Christophe , January 2008

    This paper investigates when trade facilitation reform should be undertaken at the regional level. First, looking at both efficiency and implementation considerations, it confirms the perception that the regional dimension matters. Investigating where efficiency gains can be made, this research explains why national markets alone fail to produce the full scale economies and positive externalities of trade facilitation reform. Second, because trade facilitation policies need to address coordination and capacity failures, and because of the operational complexity challenge, the choice of the adequate platform for delivering reform is crucial. The lessons are that regional trade agreements offer good prospects of comprehensive and effective reform and can effectively complement multilateral and national initiatives. However, examples of implementation of trade facilitation reform in regional agreements do not seem to indicate that regional integration approaches have been more successful than trade facilitation through specific cooperation agreements or other efforts, multilateral or unilateral. Customs unions may be an exception here, and the author suggests reasons why this could be the case.

  • 4461Services trade and growth, Hoekman, Bernard ; Mattoo, Aaditya, January 2008

    The competitiveness of firms in open economies is increasingly determined by access to low-cost and high-quality producer services - telecommunications, transport and distribution services, financial intermediation, etc. This paper discusses the role of services in economic growth, focusing in particular on channels through which openness to trade in services may increase productivity at the level of the economy as a whole, industries and the firm. The authors explore what recent empirical work suggests could be done to enhance comparative advantage in the production and export of services and how to design policy reforms to open services markets to greater foreign participation in a way that ensures not just greater efficiency but also greater equity in terms of access to services.

  • 4457Who are the net food importing countries? Ng, Francis ; Aksoy, M. Ataman ; January 2008

    The purpose of this paper is to update the information on net food importing countries, using different definitions of food, separating countries by their level of income, whether they are in conflict and whether they are significant oil exporters. The study also estimates the changes in net food importing status of these countries over the last two and a half decades, and, most important, the study measures the relative importance of these net food imports in the import basket of the countries. Our results show that while many low-income countries are net food importers, the importance and potential impact of the net food importing status has been highly exaggerated. Many low-income countries that have larger food deficits are either oil exporters or countries in conflict. Food deficits of most low-income countries are not that significant as a percentage of their imports. Our results also show that only 6 low-income countries have food deficits that are more than 10 percent of their imports. Last two decades have seen a significant improvement in the food trade balances of low-income developing countries. SSA low-income countries are an exception to this trend. On the other hand, there are a group of countries which are experiencing civil conflicts which are large importers of food, and these countries can not meet their basic needs. They also need special assistance in the distribution of food within their boundaries. Therefore, one should modify the WTO Ministerial Declaration, and focus on these conflict countries rather than the broad net food importers

  • 4423Regional integration in South Asia: what role for trade facilitation? Wilson, John S.; Otsuki, Tsunehiro, December 2007

    The trade performance of countries in South Asia over the past two decades has been poor relative to other regions. Exports from South Asia have doubled over the past 20 years to approximately USD 100 billion. In contrast, East Asia's exports grew ten times over the same period. The low level of intraregional trade has contributed to weak export performance in South Asia. The empirical analysis in this paper demonstrates gains to trade in the region from reform and capacity building in trade facilitation at the regional level. When considering intraregional trade, if countries in South Asia raise capacity halfway to East Asia's average, trade is estimated to rise by USD 2.6 billion. This is approximately 60 percent of the total intraregional trade in South Asia. Countries in the region also have a stake in the success of efforts to promote capacity building outside its borders. If South Asia and the rest of the world were to raise their levels of trade facilitation halfway to the East Asian average, the gains to the region would be estimated at USD 36 billion. Out of those gains, about 87 percent of the total would be generated from South Asia's own efforts (leaving the rest of the world unchanged). In summary, we find that the South Asian region's expansion of trade can be substantially advanced with programs of concrete action to address barriers to trade facilitation to advance regional goals.

  • 4401Transparency, trade costs, and regional integration in the Asia Pacific, Matthias Helble, Ben Shepherd, John S. Wilson, November 2007

    The authors show in this paper that increasing the transparency of the trading environment can be an important complement to traditional liberalization of tariff and non-tariff barriers. Our definition of transparency is grounded in a transaction cost analysis. The authors focus on two dimensions of transparency: predictability (reducing the cost of uncertainty) and simplification (reducing information costs). Using the Asia Pacific Economic Cooperation (APEC) member economies as a case study, the authors construct indices of importer and exporter transparency for the region from a wide range of sources. Our results from a gravity model suggest that improving trade-related transparency in APEC could hold significant benefits by raising intra-APEC trade by proximately USD 148 billion or 7.5 pecent of baseline trade in the region.

  • 4400Help or hindrance? the impact of harmonized standards on african exports, Witold  Czubala, Ben Shepherd, John S. Wilson, November 2007

    The authors test the hypothesis that product standards harmonized to de facto international standards are less trade restrictive than ones that are not. To do this, the authors construct a new database of European Union (EU) product standards. The authors identify standards that are aligned with ISO standards (as a proxy for de facto international norms). The authors use a sample-selection gravity model to examine the impact of EU standards on African textiles and clothing exports, a sector of particular development interest. The authors find robust evidence that non-harmonized standards reduce African exports of these products. EU standards which are harmonized to ISO standards are less trade restricting. Our results suggest that efforts to promote African exports of manufactures may need to be complemented by measures to reduce the cost impacts of product standards, including international harmonization. In addition, efforts to harmonize national standards with international norms, including through the World Trade Organization Technical Barriers to Trade Agreement, promise concrete benefits through trade expansion.

  • 4390Product standards, harmonization, and trade: evidence from the extensive margin, Ben Shepherd, November 2007

    The author uses a new database of EU product standards in the textiles, clothing, and footwear sectors to present the first empirical evidence that international standards harmonization is associated with increased partner country export variety. A 10 percentage point increase in the proportion of internationally harmonized standards is associated with a 0.2 percent increase in partner country export variety, whereas a 10 percent increase in the total number of standards is associated with a nearly 6 percent decrease in product variety. Although small, the harmonization elasticity is statistically significant, and proves highly robust to sample changes and instrumental variables estimation using instruments motivated by political economy considerations. Moreover, it is found to be around 50 percent higher for low income countries, which suggests that they may be particularly constrained in adapting products to meet multiple standards. Numerical simulations show that these findings are consistent with a heterogeneous firms model of trade in which harmonization is beneficial at the extensive margin provided that any increases in compliance costs are not too large.

  • 4368Trade costs, barriers to entry, and export diversification in developing countries, Allen Dennis, Ben Shepherd, September 2007

    This paper finds that a 1 percent reduction in the cost of exporting or the cost of international transport is associated with an export diversification gain of 0.3 percent or 0.4 percent respectively. Lower domestic market entry costs can also promote diversification, but the elasticity is weaker (-0.1). To obtain these results, the authors construct new measures of export diversification for 118 developing countries using highly detailed 8-digit mirror data from the European Union. The analysis also incorporates new export cost data from the World Bank's Doing Business database, covering document preparation, inland transport, administrative fees, and port/customs charges. Findings are highly robust, including to the use of geography and colonial history as instruments for trade and entry costs. Both the signs and relative magnitudes of these effects are consistent with predictions from a heterogeneous firms model of trade with asymmetric costs.

  • 4361Substitution between foreign capital in China, India, the rest of the world, and Latin America: much ado about nothing? Javier Cravino, Daniel Lederman, Marcelo Olarreaga, September 2007

    This paper explores the impact of the emergence of China and India on foreign capital stocks in other economies. Using bilateral data from 1990-2003 and drawing from the knowledge-capital model of the multinational enterprises to control for fundamental determinants of foreign capital stocks across countries, the evidence suggests that the impact of foreign capital in China and India on other countries' foreign capital stocks has been positive. This finding is robust to the use of ordinary least squares, Poisson, and negative binomial estimators; to the inclusion of time and country-pair fixed effects; to the inclusion of natural-resource endowments; and to the use of the sum of foreign capital stocks in Hong Kong (China) and mainland China instead of using only the latter's foreign capital stocks. There is surprisingly weak evidence of substitution in manufacturing foreign capital stocks away from Central America and Mexico in favor of China, and from the Southern Cone countries to India, but these findings are not robust to the use of alternative estimation techniques.

  • 4360Foreign direct investment in Latin America during the emergence of China and India: stylized facts, Javier Cravino, Daniel Lederman, Marcelo Olarreaga, September 2007

    In spite of the growing concerns about foreign direct investment being diverted from Latin America to China and India, the best available data show that Latin America has performed relatively well since 1997. Foreign capital stocks from OECD countries and the United States in particular in China and India are still far from those in the largest Latin American economies. The evidence shows that foreign capital stocks in China increased more than in Latin America during 1990-1997, but not as much since 1997. In fact, Latin America has actually performed better than China since 1997 given its lack of relative growth. The growth of foreign capital stocks in India was more stable than in China. Nonetheless, after controlling for shocks emanating from the source countries and bilateral distance between source and host countries, this paper finds a significant change in foreign capital stocks relative to China between 1990 and 1997, but no change relative to India.

  • 4357Structure and performance of the services sector in transition economies, Ana M. Fernandes, September 2007

    This paper examines the structure and performance of the services sector in Eastern European and Central Asian countries during 1997-2004. Services represent an increasing share of total value added and employment with the major sub-sectors being wholesale trade, retail trade, inland transport, telecommunications, and real estate activities. A clear divide separates EU-5 countries from South Eastern European countries and Ukraine in terms of services labor productivity. Although a large gap in productivity also separates EU-8 countries from EU-15 countries, that gap was reduced from 1997 to 2004 as most services sub-sectors experienced fast productivity growth. High skill intensive sub-sectors and information and communications technology producers and users have exhibited higher productivity levels and growth rates relative to other sub-sectors since 2000. The author finds a positive effect of services liberalization on the productivity growth of services sub-sectors. The author also finds a positive and significant effect of services liberalization in both finance and infrastructure on the productivity of downstream manufacturing.

  • 4343Clothing and export diversification: still a route to growth for low-income countries? Paul Brenton, Mombert Hoppe, September 2007

    Can the clothing sector be a driver of export diversification and growth for today's low-income countries as it was in the past for countries that have graduated into middle income? This paper assesses this issue taking into account key changes to the market for clothing: the emergence of India and especially China as exporting countries; the rise of global production chains; the removal of quotas from the global trading regime but the continued presence of high tariffs and substantial trade preferences; the increasing importance of large buyers in developed countries and their concerns regarding risk and reputation; and the increasing importance of time in defining sourcing decisions. To assess the importance of the factors shaping the global clothing market, the authors estimate a gravity model to explain jointly the propensity to export clothing and the magnitude of exports from developing countries to the E U and US markets. This analysis identifies the quality of governance as an important determinant of sourcing decisions and that there appears to be a general bias against sourcing apparel from African countries, which is only partially overcome by trade preferences.



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