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Trade and Development Quarterly: The Global Dialogue

Recent Flagship Report

Global Monitoring Report, Agenda for Inclusive and Sustainable Development, MDGs and the Environment, April 2008

A new World Bank-IMF report warns that most countries will fall short on the Millennium Development Goals (MDGs), a set of eight globally agreed development goals with a due date of 2015. Though much of the world is set to cut extreme poverty in half by then, prospects are gravest for the goals of reducing child and maternal mortality. Serious shortfalls are also likely in primary school completion, nutrition, and sanitation goals. The report also stresses the link between environment and development and calls for urgent action on climate change. To build on hard-won gains, developing countries need support to address the links between growth, development and environmental sustainability.

Of Note

  • Release of the 2008 version of the World Trade Indicators, June 17, 2008

    The World Trade Indicators 2008 publication and database will be released worldwide on June 17, 2008.   A presentation for the Washington, DC-based trade community is scheduled for the same day, followed by similar events in Geneva, Paris, and a number of developing country capitals. 

    What it the World Trade Indicators (WTI)? The World Bank has developed the WTI, a database and a ranking tool that include country-level indicators of trade performance and policies and institutions that affect trade (about 300 trade-related indicators).  The accompanying publication summarizes patterns in world trade policy and trade outcomes revealed by the WTI database, focusing mainly on regional and income-level variations.  It provides the context to help evaluate individual country progress through 210 country Trade-at-a-Glance tables and 139 country briefs. This initiative aims to benchmark country progress in these trade areas while highlighting important data gaps. It will also allow policy makers and their advisors to assess a country's relative standing in terms of trade policy and performance, and help build consensus around needed trade reforms.  

    The full database will be available on both CD and online. The website address will be: www.worldbank.org/wti2008

  • International Trade Centre (ITC) web-based Market Analysis tools

    Over the past years, the International Trade Centre (ITC) has developed, in cooperation with its partners, web-based Market Analysis tools, enabling enterprises, trade support institutions, policy-makers and academic institutions in developing and transition economies to undertake market analysis and research.  ITC’s tools also assist companies by reinforcing their ability to compete in the international market places.
    • Trade Map provides trade flows for over 5,300 products of the Harmonized System, and up to 30,000 products at national tariff line level for over 220 countries and territories. Trade data is also available at tariff line level for more than 100 countries and on a monthly or quarterly basis for more than 50 countries.

    • Market Access Map provides tariff information applied by 185 importing countries. It incorporates regional and bilateral preferences and allows users to analyze the protection of any geographic grouping and sectoral aggregation. In addition it offers the possibility for trade negotiators of simulating tariff reductions using various negotiation formulae.

    • Investment Map provides a combination of statistics on foreign direct investment (FDI) for 80 countries at the sectoral level, international trade, market access, and information on foreign affiliates.

Since January 1st, 2008, ITC provides free access to its web-based Market Analysis tools for users located in developing countries, thanks to financial contributions from the ITC’s Global Trust fund and the World Bank. ITC's tools are accessible through the Market Analysis Tools Portal. (http://www.intracen.org/mat). World Bank staff has also free access (http://mas.admintools.intracen.org/accounts/itc/). Users from developed countries are invited to register for a one-week free trial.

  • Lecture by Michael Porter to World Bank staff

    Professor Michael Porter, Bishop William Lawrence University Professor and head of the Institute for Strategy and Competitiveness, delivered a flagship lecture to Bank staff on “Micro-Foundations of Competitiveness and Policy Implications” in April 2008. The lecture was a resounding success and has already generated a lively debate on the importance of a cluster-based approach for competitiveness, including the role for governments.  For more information on Professor Porter’s work, visit website www.isc.hbs.edu

For The Record

  • The Enhanced Integrated Framework (EIF) selection panel for the Trust Fund Manager selected UNOPS proposal

    The selection panel for the EIF Trust Fund Manager (TFM) selected the proposal of United Nations Office for Project Services (UNOPS) on April 9, 2008. UNOPS is a UN agency with headquarters in Copenhagen, Denmark.  It also has an established office in Geneva, and it is expected that the TFM activities will be handled out of the Geneva office by staff dedicated to the EIF, supported by regional offices in Africa and Asia. The EIF board and UNOPS will now communicate a timetable for the operationalization of the EIF Trust Fund.

    The selection panel, including donors and LDCs, appreciated and complimented the Bank- the only other competing proposal- for their efforts to submit a high quality proposal.  The Bank will remain committed to the IF partnership and to helping the LDCs leverage the world economy to achieve sustainable growth and reduce poverty. As announced by the World Bank’s president Zoellick in November 2007, the Bank is expanding its aid for trade activities as a way of promoting sustainable and inclusive globalization (see previous edition of Trade and Development Quarterly for more details).

  • Meeting with the ITCSD and WTO ambassadors in Geneva and Washington, DC

    Richard Newfarmer, Special Representative to the UN and the WTO, made a presentation on ‘Aid for Trade and the World Bank’ at the International Center for Trade and Sustainable Development (ICTSD) Weekend Workshop on “Doha Development Round: LDCs in the End Game” in March 2008. This event gathered prominent representatives of the LDCs (e.g., Ambassadors from Bangladesh and Lesotho) together with the WTO chairs of the agriculture, NAMA and services negotiations. Some 40 other representatives were also attending, including Ambassadors from China, India, and Senegal. 

    The World Bank also received a delegation of 8 WTO ambassadors -from Mexico, Nigeria, the Pacific Islands, Senegal, Singapore, Uganda and Uruguay- on April 29, 2008 to discuss the Bank’s work on Doha, Aid for Trade, trade facilitation projects, and training and capacity building. The event was organized by the ICTSD as part of their series of Washington Dialogues initiated in early 2006 and designed to bring together Geneva-based trade negotiators and policy makers to meet with U.S. policymakers and stakeholders to debate developmental perspectives and get better acquainted with the political realities of the United States and their significance on the Doha Development Round.

  • A presentation of the Logistics Performance Indicators (LPI) in February 2008 in Geneva

    Gerard McLinden, Senior Trade Facilitation Specialist, and Alina Mustra, Trade Logistics Consultant, presented the Logistics Performance Indicators (www.worldbank.org\lpi) to the Committee to the WTO’s Negotiating Committee on Trade Facilitation.  The meeting underscored the importance of trade facilitation and aid for trade.  Questions revolved around methodology, policies, and the role of the WTO. 

  • Launch of the Services Handbook in Geneva and Washington

    The Services Handbook was launched by the authors Aaditya Mattoo and Gianni Zanini, Lead Economists in the World Bank, in Geneva and in Washington, D.C. The handbook aimed squarely at promoting greater pro-poor liberalization of services. In particular, the Handbook highlights the potential gains from the reform of trade in communications, finance, transport and business services, estimated to be more than five times larger than those from a comparable liberalization of trade in goods. www.oup.com/uk/catalogue/?ci=9780199235223

  • Trade Costs and the Business Environment: Moving New Research into Results on the Ground, May 15, 2008

    Description: 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 a key determinant of successful integration into the world economy and lifting the poor out of poverty.  This one-day course will provide an update on these issues based on the question: What research, data, and empirical evidence do we have today on trade facilitation and trade costs - and how do we move that research and analysis more efficiently into operations on the ground at the country and regional level?


Upcoming Events

COURSES


  • Trade Policy for Development course, June 2 - 13, 2008

    Description: 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).

    Enroll: Applications are being accepted at:  http://www.sipa.columbia.edu/academics/nondegree_programs/tradeprogram/

    Contact in the World Bank: Carlos Garcia-Benavides, 202 473 7332, ggarciabenavides@worldbank.org

  • The Development Implications of Intellectual Property Rights and TRIPS, A short course jointly organized by WBIPR and PRMTR June 4 (afternoon) – June 5, 2008

    Summary: The controversy around the role of Intellectual Property Rights (IPRs) in development among scholars and advocacy organizations has created difficult challenges for policy makers and negotiators that face the task whether to reform domestic IPR regimes unilaterally, or to define their positions in a multilateral or a North-South negotiating forum.   The multilateral framework of the TRIPS agreement in the WTO has proven costly to implement and difficult to enforce for developing countries.  Moreover, the trend toward stronger domestic protection of intellectual property in developed countries since the mid-1990s has been often seen as exclusionary of, and posing an increasingly large burden on, developing countries.  Finally, the demands by some developed countries to include IPRs and TRIPS+ provisions in negotiations of bilateral preferential trade agreements has often been a stumbling block to their speedy conclusion.  

    Description: This short course is aimed at helping Bank country economists and other sectoral staff, embassy trade officials and negotiators based in DC, trade staff in US government agencies, trade advisors and analysts in DC-based think tanks, NGOs, and international organizations understand the development implications of Intellectual Property Rights.  In this respect, it complements other organizations’ training efforts that are more focused on legal disciplines and enforcement issues.  It addresses the following questions:
    • What is the economic rationale for protection of IPRs?
    • What are the development implications of implementing the TRIPS agreement and of TRIPS+ provisions in bilateral North-South free trade agreements?
    • What role will IPRs play in future trade negotiations? 
    • What do developing countries have to gain from strengthening their IPRs regimes, especially with respect to innovation and the development and diversification of exports?

Speaker: Carsten Fink, a World Bank Institute expert in this area, currently on sabbatical with Sciences Po in Paris, France, will be the main lecturer. In addition, several other Bank and external experts will contribute with lectures and case studies on the legal aspects of IPRs, on their role in fostering innovation, economic growth, and export development, and on their welfare implications, including in the health and agricultural sectors. 

Audience: Participants are expected to attend all sessions during the first two half days of the course, but can choose during the last half day to attend only one of the two sessions devoted to sectoral issues, in health (the focus will be on pharmaceuticals) and in agriculture (related to GMOs, GIs, and biodiversity). 

Contacts:

  • Gianni Zanini, Lead Economist, WBIPR;
  • Faezeh Foroutan, Senior Economist, PRMTR
  • Thomas Dowling, Consultant; Tel. (202) 458-8714; email: tdowling@worldbank.org


VIDEOCONFERENCE COURSES

  • South Asia Capacity Building for Bilateral, Plurilateral and Multilateral Trade Negotiations, May 28 - June 25, 2008

    Registration deadline: May 13, 2008

    Description: This course will explore a broad range of useful negotiating tools in the context of the South Asian economies. It is designed based on the willingness of many South Asia Countries to consider bilateral/regional FTA arrangements as some other Asian countries have done in the past (e.g., Malaysia, Thailand or Singapore). Given the complexity of many South Asian countries' trade policies and exports incentive systems, the course focuses on building capacity for trade negotiation to ease the achievement of successful trade agreements (in the context of WTO Doha Development Round, agriculture, NAMA and services) with key partners.

    Target Audience:  Government Officials, senior trade policymakers, advisors, industry/sector representatives, academics, researchers as well as civil society representatives from South Asia

    Task Manager: Salomon Samen, Ssamen@worldbank.org202 458 1283
    Coordinator: Raymond K. Boumbouya, rboumbouya@worldbank.org, 202 458 8929

  • Trade Finance Tools for Export Diversification, May 15 - June 12, 2008

    Registration deadline: May 5, 2008

    Description: This course intends to help developing countries lift the burden of poverty in the long run. This activity will help answer several questions:
    How can potential exporters mobilize investment finance in low-income countries to break into new geographic and product markets?
    • What is the role of formal financial institutions and what can be done by specialized microfinance schemes?
    • What should take primacy, gaps most frequently found in credit markets for working capital, for investment, or for venture capital?
    • What are the requirements for government policy and institutions to be effective?
    • How can investors mobilize investment finance in low income countries to break into new geographic and product markets?
    • What is the role of liberalization including liberalization of trade in financial services?
    • What are the gaps found in credit markets for working capital investments or working capital?
    • Can Export Credit Agency (ECA) be the answers to export finance constraints in developing countries? What are the lessons of experience of successful ECA?
    • What are necessary conditions for successful ECA in developing countries?

Trade transactions can be facilitated by a variety of financial tools including trade financing instruments, Export Credits, Export Credit Insurance and Export Credit Guarantees; and firms can choose to finance their transactions through a variety of instruments including: captive financing, factoring, or independent credit collection agencies.

Target Audience: Trade policymakers, advisors, researchers, private operators (in agriculture, industry and services) and representatives of export support institutions in client developing countries

Task Manager: Salomon Samen, Ssamen@worldbank.org, 202 458 1283
Coordinator: Raymond K. Boumbouya, rboumbouya@worldbank.org, 202 458 8929


E-LEARNING COURSES

  • Export Development and Diversification, May 5 - June 6, 2008

Description: This Internet-based course aims at providing trade policy makers, advisors, researchers, private sector operators (representatives of agriculture, industry, and services), and export support institutions in client countries with useful insights and better understanding of: (i) factors, institutions, processes, policies and principles necessary for accelerated and diversified exports in developing countries; and (ii) lessons of experience of successful export development strategies in specific countries.

The course has been developed by the World Bank Institute’s Poverty Reduction and the Finance and Private Sector Development units, in partnership with the International Trade Department and the Development Research Group in the World Bank, and the International Trade Centre (ITC, the technical cooperation agency of UNCTAD and WTO, based in Geneva, Switzerland).

It comprises nine modules drawn from World Bank research, studies, WBI-commissioned overview papers, non-Bank seminal works and case studies, as well as cutting edge knowledge and research developed by other partner institutions and researchers.

Contact: Salomon Samen, Course Director, Ssamen@worldbank.org, 202 458 1283.
Coordinator: Ignacio Hernandez, Course Coordinator, ihernandez@worldbank.org

 

  • Standards and Trade E-Learning Course: Challenges and Opportunities for Developing Country Agro-Food Trade, June 2 - 27, 2008

    Registration deadline: May 9, 2008

    Description: This internet-based activity is designed to examine core principles and institutions related to standards and trade, the emerging dynamics in the setting, implementation, and enforcement of food safety, quality, and related public and private standards, within the context of high-value agro-food products. The course will also focuses on the status, strategies, and experiences of developing countries in influencing and implementing these standards; as well as the costs and benefits associated with standard compliance, and their distributional impacts, with a focus on the set of public and private initiatives and interventions attempting to facilitate standards compliance, particularly among small-scale producers and enterprises.

    Target Audience: Participants from developing countries such as policymakers and technical specialists in pertinent Ministries and agencies of government, representatives from private industry, farm, and consumer organizations, representatives from NGOs active in the field, and selected developement agency staff.

    Task Manager: Salomon Samen, Ssamen@worldbank.org202 458 1283
    Coordinator: Raymond K. Boumbouya, rboumbouya@worldbank.org, 202 458 8929

  • Trade Facilitation for Export Diversification in Small or Medium South Asian Countries, June 9 - 13, 2008

    Description: This Internet-based course aims at providing trade policy makers, advisors, researchers, private sector operators (representatives of agriculture, industry, and services), and export support institutions in small or medium South Asian countries (Afghanistan, Nepal, Bhutan, Bangladesh, Sri-Lanka, Pakistan, and Maldives) with useful insights and better understanding of trade facilitation, transit, and logistics constraints preventing optimal  export diversification in  small or medium South Asian Countries.

    The course focuses on trade facilitation, transit, and logistics constraints and their implication for export performance of small or medium South Asian countries. These constraints are particularly onerous for landlocked countries. It has been suggested that transport costs for landlocked countries are 50% higher than for coastal countries, with a large share of these extra costs resulting from poor transit procedures.  To the extent that these procedures are excessively costly, they render imports more expensive than they should be and increase costs for exports.  More expensive imports lower a country’s external competitiveness as it makes production for the internal market more rewarding to the producer.  Its anti export bias acts in a way similar to import duties.  In addition, complex and costly border procedures –amongst which transit procedures- increase the cost of imports that are incorporated in exports, thus making exports less competitive.  

    Contact: Salomon Samen, Course Director, Ssamen@worldbank.org, 202 458 1283.
    Coordinator: Ignacio Hernandez, Course Coordinator, ihernandez@worldbank.org


WORKSHOP

  • Bi-annual Meeting of the Global Facilitation Partnership for Transportation and Trade (GFPTT), June 9-10, 2008, in Cape Town, South Africa, followed by the The OECD Regional Forum on Trade Facilitation

    The GFPTT is a collaborative tool for practitioners and policy makers involved in trade facilitation and transport facilitation (TTF).

    At the next bi-annual meeting, the Bank will present some initial findings of a major global transit project it has recently commissioned. Some time will also be devoted to the important issue of improving transit operations. These should act as catalysts for further discussion.

    Click here for more information on the event.


Recent Trade-Related Working Papers

  • 4612 - Measuring distortions to agricultural incentives, revisited, Kym Anderson, Marianne Kurzweil, Will Martin, Damiano Sandri, Ernesto Valenzuela, April 2008

    Notwithstanding the tariffication component of the Uruguay Round Agreement on Agriculture, import tariffs on farm products continue to provide an incomplete indication of the extent to which agricultural producer and consumer incentives are distorted in national markets. Especially in developing countries, non-agricultural policies indirectly impact agricultural and food markets. Empirical analysis aimed at monitoring distortions to agricultural incentives thus need to examine both agricultural and non-agricultural policy measures including import or export taxes, subsidies and quantitative restrictions, plus domestic taxes or subsidies on farm outputs or inputs and consumer subsidies for food staples. This paper addresses the practical methodological issues that need to be faced when attempting to undertake such a measurement task in developing countries. The approach is illustrated in two ways: by presenting estimates of nominal and relative rates of assistance to farmers in China for the period 1981 to 2005; and by summarizing estimates from an economy-wide computable general equilibrium model of the effects on agricultural versus non-agricultural markets of the project's measured distortions globally as of 2004.

  • 4598 - The challenge of reducing international trade and migration barriers, Kym Anderson, L. Alan Winters,  April 2008

    While barriers to trade in most goods and some services including capital flows have been reduced considerably over the past two decades, many remain. Such policies harm most the economies imposing them, but the worst of the merchandise barriers (in agriculture and textiles) are particularly harmful to the world's poorest people, as are barriers to worker migration across borders. This paper focuses on how costly those anti-poor trade policies are, and examines possible strategies to reduce remaining distortions. Two opportunities in particular are addressed: completing the Doha Development Agenda process and freeing up the international movement of workers. A review of the economic benefits and adjustment costs associated with these opportunities provides the foundation to undertake benefit/cost analysis required to rank this set of opportunities against those aimed at addressing the world's other key challenges as part of the Copenhagen Consensus project. The paper concludes with key caveats and suggests that taking up these opportunities could generate huge social benefit/cost ratios that are considerably higher than the direct economic ones quantified in this study, even without factoring in their contribution to alleviating several of the other challenges identified by that project, including malnutrition, disease, poor education and air pollution.

  • 4594 - Implications of higher global food prices for poverty in low-income countries, Maros Ivanic,  Will Martin

    In many poor countries, the recent increases in prices of staple foods raise the real incomes of those selling food, many of whom are relatively poor, while hurting net food consumers, many of whom are also relatively poor. The impacts on poverty will certainly be very diverse, but the average impact on poverty depends upon the balance between these two effects, and can only be determined by looking at real-world data. Results using household data for ten observations on nine low-income countries show that the short-run impacts of higher staple food prices on poverty differ considerably by commodity and by country, but, that poverty increases are much more frequent, and larger, than poverty reductions. The recent large increases in food prices appear likely to raise overall poverty in low income countries substantially.

  • 4575 - Domestic constraints, firm characteristics, and geographical diversification of firm-level manufacturing exports in Africa, Yutaka Yoshino, April 2008

    Using firm-level data on manufacturing sectors in Africa, this paper addresses how domestic supply constraints and other firm characteristics explain the geographical orientation of firms' exports and the overall market diversification of African manufacturing exports. The degree of market diversification, measured by the number of export destinations, is highly correlated with export intensity at the firm level, and both embody strong scale effects. Technological factors, such as new vintage capital and Internet access, which improve production efficiency and lower export costs, show strong effects on the firm-level export intensity. Some qualitative differences exist between Africa's regional exports and exports to the global markets. Foreign ownership is a significant factor in characterizing the intensity of global exports but not regional exports. The technological factors are significant in both cases, but more so in global exports. Public infrastructure constraints, such as inferior power services and customs delays, seem to have more immediate impacts on regional exports in general, implying the relevance of addressing behind-the-border constraints in fostering regional integration in Africa.

  • 4570 - Regional household and poverty effects of Russia's accession to the world trade organization, Thomas Rutherford, David Tarr, March 2008

    This paper develops a seven-region comparative static computable general equilibrium model of Russia to assess the impact of accession to the World Trade Organization on these seven regions (the federal okrugs) of Russia. In order to assess poverty and distributional impacts, the model includes ten households in each of the seven federal okrugs, and allows for foreign direct investment in business services and endogenous productivity effects from additional varieties of business services and goods, which the analysis shows are crucial to the results. National welfare gains are about 4.5 percent of gross domestic product in the model, but in a constant returns to scale model they are only 0.1 percent. All deciles of the population in all seven federal okrugs can be expected to significantly gain from Russian World Trade Organization accession.

  • 4561 - Burley tobacco clubs in Malawi: nonmarket institutions for exports, Mariano Negri, Guido G. Porto, March 2008

    This paper studies nonmarket institutions that facilitate exports. In Malawi, as in many other developing countries, farmers face numerous constraints that disconnect them from export markets. The paper explores the role of a local institution, the burley tobacco clubs, in bridging smallholders to exports. Burley clubs potentially enable farmers to increase their tobacco farming productivity by providing services related to institutional access, collective action, economies of scale, and supporting network. Using matching methods and instrumental variable techniques, the authors find that tobacco club membership causes an increase of between 40-74 percent in output per acre and an increase of between 45-89 percent in tobacco sales per acre. Instead, neither the land share allocated to tobacco nor the unit value obtained by the producers is affected by club membership.

  • 4560 - Trade remedies and non-market economies: economic implications of the first US countervailing duty case on China, Longyue Zhao, Yan Wang, March 2008

    In 2007, the United States Department of Commerce altered a 23-year old policy of not applying the countervailing duty law to non-market economies, and initiated eight countervailing and antidumping duty investigations on Chinese imports. The change brings heated debate on trade remedy policies and issues of non-market economies. This study focuses on the first countervailing duty case on imported coated free sheet paper from China and analyzes the implications of this test case for United States-China bilateral trade, and industrial policies in transitioning market economies. The paper also provides a brief review of the economics of subsidies, World Trade Organization rules on subsides and countervailing measures, and United States countervailing duty laws applied to non-market economies. While recently acceded countries should review their domestic development policies from the perspective of economic efficiency and comply with the World Trade Organization rules, it is also important to further clarify the issues of non-market economies under the multilateral trading system, and pay keen attention to the rules negotiations in the current World Trade Organization Doha Development Round.

  • 4559 - Expanding taxable capacity and reaching revenue potential: cross-country analysis, Tuan Minh Le, Blanca Moreno-Dodson, Jeep Rojchaichaninthorn, March 2008

    An effective tax system is fundamental for successful country development. The first step to understand public revenue systems is to establish some commonly agreed performance measurements and benchmarks. This paper employs a cross-country study to estimate tax capacity from a sample of 104 countries during 1994-2003. The estimation results are then used as benchmarks to compare taxable capacity and tax effort in different countries. The authors classify countries into four distinct groups by their level of actual tax collection and attained tax effort. The analysis provides guidance for countries with various levels of tax collection and tax effort.

  • 4558 - Improving logistics costs for transportation and trade facilitation, Julio A Gonzalez,  Jose Luis Guasch, Tomas Serebrisky, March 2008

    Access to basic infrastructure services - roads, electricity, water, sanitation - and the efficient provision of the services, is a key challenge in the fight against poverty. Many of the poor (and particularly the extreme poor) in rural communities in Latin America live on average 5 kilometers or more from the nearest paved road, which is almost twice as far as non-poor rural households. There have been major improvements in access to water, sanitation, electricity, telecommunications, ports, and airports, but road coverage has not changed much, although some effort and resources have been invested to improve the quality of road networks. This paper focuses on the main determinants of logistics costs and physical access to services and, whenever possible, provides evidence of the effects of these determinants on competitiveness, growth, and poverty in Latin American economies. The analysis shows the impact of improving infrastructure and logistics costs on three fronts - macro (growth), micro (productivity at the firm level), and poverty (the earnings of poor/rural people). In addition, the paper provides recommendations and solutions that encompass a series of policies to reduce the prevalent high logistics costs and limited access to services in Latin America. The recommendations rely on applied economic analysis on logistics and trade facilitation.

  • 4551 - Avian influenza and the poultry trade, Alessandro Nicita, March 2008

    Because of high mortality rates, high rates of contagion, and the possibility of cross-species infection to mammals including humans, high pathogenic avian influenza is a major concern both to consumers and producers of poultry. The implications of the avian influenza for international poultry markets are large and include the loss of consumer confidence, loss of competitiveness, loss of market shares, supply shortages, and disruptions of trade flows. This paper illustrates the effect that high pathogenic avian influenza has had on the trade flows of poultry products. The findings suggest that outbreaks of avian influenza have greatly restructured the international flow of poultry products. Consequent to high pathogenic avian influenze, Brazil has emerged as the world's largest supplier of frozen raw chicken products, while poultry industries in Southeast Asia have largely refocused their export markets by converting production from unprepared to prepared poultry meat.

  • 4550 - Heterogeneous quality firms and trade costs, Matthias Helble, Toshihiro Okubo, March 2008

    There is increasing empirical evidence that vertical product differentiation is an important determinant of international trade. However, the economic literature so far has solely focused on the case in which quality trade stems from differences between countries. No studies investigate the role of quality trade between similar economies. This paper first develops a simple theoretical trade model that includes vertical product differentiation in a heterogeneous-firm framework. The model yields three main predictions for trade between similar economies. First, exported goods are of higher quality than goods sold on the domestic market. Second, larger economies have on average higher export qualities compared with smaller economies. Third, with increasing trade costs higher quality goods are exchanged. For all three effects, strong empirical support is found using detailed export trade data of the United States and 15 European Union countries.

  • 4546 - Integration of markets vs. integration by agreements, Nathalie Aminian, K.C.; Fung, Francis Ng, March 2008

    This paper provides an analysis of the two channels of regional integration: integration via markets and integration via agreements. Given that East Asia and Latin America are two fertile regions where both forms of integrations have taken place, the authors examine the experiences of these two areas. There are four related results. First, East Asia had been integrating via markets long before formal agreements were in vogue in the region. Latin America, by contrast, has primarily used formal regional trade treaties as the main channel of integration. Second, despite the relative lack of formal regional trade treaties until recently, East Asia is more integrated among itself than Latin America. Third, from a purely economic and trade standpoint, the proper sequence of integrations seems to be first integrating via markets and subsequently via formal regional trade agreements. Fourth, regional trade agreements often serve multiple constituents. The reason why integrating via markets first can be helpful is because this can give stronger political bargaining power to the outward-looking economic-oriented forces within the country.

  • 4544 - Modeling services liberalization: the case of Kenya, Edward J. Balistreri, Thomas F. Rutherford, David G. Tarr, March 2008

    This paper employs a 55-sector small open economy computable general equilibrium model of the Kenyan economy to assess the impact of the liberalization of regulatory barriers against foreign and domestic business service providers in Kenya. The model incorporates productivity effects in both goods and services markets endogenously, through a Dixit-Stiglitz framework. It estimates the ad valorem equivalent of barriers to foreign direct investment based on detailed questionnaires completed by specialists in Kenya. The authors estimate that Kenya will gain about 11 percent of the value of Kenyan consumption in the medium run (or about 10 percent of gross domestic product) from a full reform package that also includes uniform tariffs. The estimated gains increase to 77 percent of consumption in the long-run steady-state model, where the impact on the accumulation of capital from an improvement in the productivity of capital is taken into account. Decomposition exercises reveal that the largest gains to Kenya will derive from liberalization of costly regulatory barriers that are non-discriminatory in their impacts between Kenyan and multinational service providers.

  • 4543 - The development impact of the illegality of drug trade, Philip Keefer, Norman V. Loayza, Rodrigo R. Soares, March 2008

    This essay reviews many of the less considered consequences of the war on drugs, particularly the consequences for developing countries, and weighs them against the evidence that exists regarding the likely efficacy of current strategies to curb drug use and trade. The most important unintended consequences of drug prohibition are the following. First, the large demand for drugs, particularly in developed countries, generates the possibility of massive profits to potential drug providers. Since they cannot be organized freely and under the protection of the law, they resort to the formation of organized crime groups, using violence and corruption as their means of survival and expansion. In severe cases, the challenge to the state is such that public stability and safety are severely compromised. Second, prohibition and its derived illegal market imply the expropriation of endowments and resources used to produce and trade drugs. In many instances, this entails the transfer of wealth from poor to rich countries and from poor peasants to rich (and ruthless) traders. Third, criminalization can exacerbate the net health effects of drug use. These consequences are so pernicious that they call for a fundamental review of drug policy around the world.

  • 4537 - Preferential liberalization and its economy-wide effects in Honduras, Denis Medvedev, March 2008

    This paper quantifies the likely benefits of trade and investment liberalization in a small, poor, open economy, using the accession of Honduras to the Dominican Republic-Central American Free Trade Agreement as a case study. The results show that bilateral trade liberalization with the United States is likely to have almost no effect on welfare in Honduras, while the reciprocal removal of protection vis-à-vis the rest of Central America would lead to significantly larger gains. Potential gains from increased net foreign direct investment inflows overwhelm those expected from trade reform alone, particularly if the new foreign direct investment generates productivity spillovers. However, if it is to replace Honduran investment rather than complement domestic capital formation, growth performance is unlikely to improve and may even suffer. The paper's results identify several areas for policy attention by Honduran policy makers to make the Dominican Republic-Central American Free Trade Agreement more development-friendly. These include carefully considering the budgetary implications of trade reform, widening social safety nets to counter the trends toward increasing income inequality, and sequencing the reforms to ensure a close alignment of Honduras' comparative advantage on the regional and global markets.