Knowledge in Action: Trade & Competitiveness Publications Update Recent titles in Trade and Competition, Investment Climate, Competitive Sectors, and Innovation and Entrepreneurship 2016 Trade & Competitiveness Global Practice INTRODUCING THE 2ND ANNUAL Knowledge in Action: Publications Update We are very pleased to present the 2016 edition of Knowledge in Action: Publications Update, which highlights key resources authored by World Bank Group staff and partners of the Trade and Competitiveness (T&C) global practice. T&C is committed to helping countries develop more dynamic and integrated economies by expanding market opportunities and enabling private initiative. Our work focuses on strengthening product markets through policies and programs designed to improve the investment climate, boost trade, promote competition, build sector competitiveness, and foster innovation and entrepreneurship. The publications featured here, a portion of the total collection, illustrate the essential role of knowledge creation and sharing in how we work to deliver for clients in developing countries. T&C offers interdisciplinary, cross-practice analytics within an integrated package of advisory, financial, and convening services. Our projects are supported within T&C by a robust knowledge flow, intensive learning, and a culture of innovation. Knowledge exchanges with partners—within the Bank Group, the private sector, and the international community—are an important source of new ideas and approaches. We invite you to explore the substance of T&C’s work in private sector development through the empirical evidence, on-the- ground perspectives, and diverse solutions conveyed in our publications. This edition reflects a full range of topics, and we hope you’ll find the subjects relevant and the information useful. Cecile Fruman Anabel Gonzalez Klaus Tilmes Director Senior Director Director CONTENTS 2 TRADE & COMPETITION 8 INVESTMENT CLIMATE 11 COMPETITIVE SECTORS 13 INNOVATION & ENTREPRENEURSHIP 15 INDEX TRADE & Competition and Poverty COMPETITION How Competition Affects the Distribution of Welfare Tania Begazo Gomez and Sara Nyman A literature review shows competition policy reforms can deliver benefits for the poorest households and improve income distribution. A lack of competition in food markets hurts the poorest households the most. Competition in input markets and between buyers helps farmers and small businesses. And more competitive markets bolster job growth over the longer term. (2016) 2 Depreciations without Exports? Global Value Chains and the Exchange Rate Elasticity of Exports Swarnali Ahmed, Maximiliano Appendino, and Michele Ruta This paper analyzes how the exchange rate elasticity of exports has changed over time and across countries and sectors, and how the formation of global value chains has affected this relationship. (2015) The Global Trade Slowdown Improving Trade and Transport Cyclical or Structural? for Landlocked Developing Cristina Constantinescu, Aaditya Mattoo, Countries: A Ten-Year Review and Michele Ruta World Bank Group and UN-OHRLLS This paper focuses on the sluggish This publication provides a growth of world trade relative to income comprehensive 10-year review in growth in recent years. The analysis order to assess the progress made uses an empirical strategy based on in improving access of landlocked an error correction model to assess developing countries to global markets, whether the global trade slowdown is identify the remaining challenges these structural or cyclical. (2015) countries face, and present improved and innovative ways to overcome them. This publication is based on the practical knowledge from implementing Global Trade Watch the Almaty Program policies, shared Trade Developments in 2015 3 by both the World Bank Group and the Cristina Constantinescu, Aaditya Mattoo, United Nations. (2014) and Michele Ruta After sharply declining in the first half of 2015, world trade began to grow, albeit at a slow pace. Recent trade developments should be seen in the context of a deceleration in trade growth since the early 2000s, and particularly since the global financial crisis. These developments reflected old and new cyclical factors as well as enduring structural determinants, such as the maturation of global value chains and the slower pace of trade liberalization. (2016) Inclusive Global Value Chains Internationalizing Sub- Policy Options in Trade and Saharan Africa’s Education Complementary Areas for and Health Services GVC Integration by Small and Nora Dihel and Arti Grover Goswami Medium Enterprises and Low- This paper summarizes the nature and Income Developing Countries determinants of trade in education Organisation for Economic Co-operation and health services in a selected and Development and the World Bank Group group of countries in Eastern and Southern Africa, using a combination This report’s focus is making global of quantitative and qualitative methods. value chains more inclusive through It presents results from new, innovative policies that address participation data collection methods, such as constraints faced by small and medium crowdsourcing, to shed some light enterprises and facilitation access on the magnitude, determinants, and for low-income developing countries. restrictions on intra-African trade in 4 (2015) education and health services. (2015) Low-Income Developing Countries and G-20 Trade and Investment Policy World Bank Group This background paper on the G-20 study covers the characteristics of low-income developing countries’ integration in the world economy; the evolution of G-20 policies that affect LIDCs’ integration; and the potential for changes in the G-20 trade and investment policy landscape to benefit LIDCs. (2015) Making Global Value Chains Poverty and Shared Prosperity Work for Development Implications of Deep Integration Daria Taglioni and Deborah Winkler in Eastern and Southern Africa Edward Jay Balistreri, Maryla Maliszewska, This publication provides a framework, Israel Osorio-Rodarte, David Tarr, and analytical tools, and policy options. It Hidemichi Yonezawa shows why global value chains (GVCs) require fresh thinking. It presents Evidence indicates that trade costs a methodology for quantifying the are a much more substantial barrier extent of a country’s participation in to trade than tariffs are, especially GVCs, based on available data. It also in Sub-Saharan Africa. This paper proposes a strategic framework to decomposes trade costs into trade guide policymakers in identifying the facilitation, non-tariff barriers, and the key objectives of GVC participation and costs of business services. It assesses development and in selecting suitable the poverty and shared prosperity economic strategies to achieve them. impacts of deep integration to reduce these trade costs. (2016) 5 (2016) The Role of Trade in Trade Policy and Food Security Ending Poverty Improving Access to Food in World Bank Group and World Trade Developing Countries in the Organization Wake of High World Prices Marcus Bartley Johns (WBG), Paul Ian Gillson and Amir Fouad Brenton (WBG) and Roberta Piermartini (WTO) The issue of food security has been thrust further into the public spotlight This report discusses how trade will with the rise of real food prices in make an essential contribution to ending recent years. There is no global food extreme poverty by opening up new shortage: the problem is one of moving opportunities for jobs; lowering prices food, often across borders, from for products consumed by the poor; surplus production areas to deficit ones improving access to external markets for at prices that low-income consumers in the goods that the poor produce; and developing countries can afford. Trade bringing about structural changes in can be an excellent buffer for domestic 6 the economy as export sectors expand fluctuations in food supply. (2015) and increase employment of low-skilled workers. (2015) Trading Away from Conflict Using Trade to Increase A Step Ahead: Competition Resilience in Fragile States Policy for Shared Prosperity Massimiliano Cali and Inclusive Growth Organisation for Economic Co-operation This report analyzes the extent to and Development and World Bank Group which trade affects the risk of conflict by mapping and empirically testing This book puts forward a research the channels through which trade may agenda that advocates the importance affect conflict and political stability, of market competition, effective market using data from more than 120 regulation, and competition policies for developing countries and in-depth achieving inclusive growth and shared case studies. It recommends policies prosperity in emerging and developing for fragile and conflict-affected states. economies. (forthcoming) (2015) Transforming Markets Valuing Services in Trade through Competition A Toolkit for Competitiveness New Developments and Recent Diagnostics Trends in Competition Advocacy Sebastián Sáez, Daria Taglioni, Erik van Tanja K. Goodwin and Martha Martinez der Marel, Claire H. Hollweg, and Licetti Veronika Zavacka This publication provides an Services are a key input in countries’ assessment of new developments trade competitiveness, as well as a and recent trends in competition new source of trade diversification. advocacy based on an innovative and This toolkit provides a framework, comprehensive conceptual framework guidelines, and set of practical tools that builds on practical implementation to conduct a thorough analysis and by authorities across jurisdictions. diagnostic of trade competitiveness in (2016) the services sector with a methodology that sheds light on a country’s ability both to export services and improve 7 Uruguay Trade Competitiveness 101540 v1 its export performance through policy Diagnostic URUGUAY Trade competitiveness diagnostic change. (2014) Alberto Portugal, Jose-Daniel Reyes, and Gonzalo Varela This report analyzes export dynamics in Uruguay over the period 2000–2013, benchmarking them against relevant comparator countries. It looks at export outcomes through four dimensions of export performance: the evolution, composition, and growth orientation of the country’s export basket; the degree of diversification across products and markets; the level of sophistication and quality; and the survival rate of export relationships. (2015) INVESTMENT Africa Competitiveness CLIMATE Report 2015 World Economic Forum, World Bank, African Development Bank, Organisation for Economic Co-operation and Development This report provides detailed competitiveness profiles for the 40 African countries included in the World Economic Forum’s Global Competitiveness Index. It provides country-specific context and highlights the unique challenges facing economies. Africa’s best path forward, according to the report, is to turn high 8 growth into sustainable and inclusive growth by raising productivity across all sectors of the economy and creating quality employment. (2015) The Impact of Investment Policy Investment Climate Reforms in a Changing Global Economy and Job Creation in Developing A Review of the Literature Countries: What Do We Know Roberto Echandi, Jana Krajcovicova, and and What Should We Do? Christine Zhenwei Qiang Aminur Rahman This paper presents an overview of This paper reviews the literature on the the literature on the impact of foreign role of investment climate reforms in direct investment. It argues that a job creation. It finds that the current logical framework is needed to organize landscape of employment and private existing evidence from research to fill sector activity in developing countries gaps in the literature and make existing indicates a number of potential evidence more useful in targeting policy channels through which investment making. (2015) climate reforms can positively affect job creation. However, rigorous empirical Investment Climate in Africa evidence is scarce, and most of the 9 The Impact of Reform on relevant studies focus on business Sub‑Saharan Africa’s Growth entry reforms. (2014) David Bridgman and Aref Adamali This note finds some connection between investment climate reform and economic growth. However, establishing more concrete evidence of causation will require greater focus at the country level, as well as on small and medium enterprises. This is where investment climate interventions generate change. (2015) New Voices in Investment Productividad, Competitividad A Survey of Investors from y Diversificación Productiva Emerging Countries World Bank Group and Consorcio de Laura Gómez-Mera, Thomas Kenyon, Investigación Económica y Social (CIES) Yotam Margalit, José Guilherme Reis, and Increases in productivity levels have Gonzalo Varela boosted Peru’s growth and social One of every three dollars invested progress in the last decade and will abroad in 2012 was originated in become even more important in a less multinationals from developing favorable external environment. To countries. This study sheds light on the increase productivity, more efficient characteristics, motivations, strategies, companies must have greater capacity and needs of emerging market and greater incentives to grow, investors, and it identifies differentiating absorbing workers and resources factors among them that are associated currently used with low productivity. with investment decisions. (2015) It is essential to promote competition 10 and lower costs of complying with regulation; reduce rigidities in the labor market and strengthen the skills of the workforce; and facilitate foreign trade. (2016) Competitive Cities COMPETITIVE for Jobs and Growth What, Who, and How SECTORS World Bank Group A “competitive city” successfully facilitates its firms and industries to grow jobs, raise productivity, and increase incomes of citizens. This report analyzes what makes a city competitive and how more cities can become more competitive as a pathway to eliminating extreme poverty and promoting shared prosperity. (2015) Investment Promotion: A Guide to 11 Investor Targeting in Agribusiness World Bank Group This toolkit serves as a guide to help project leaders in working with client governments to attract concrete agribusiness investments that create jobs, reduce poverty, and develop value chains in an environmentally and socially sustainable way. It provides a step-by-step guide for developing and executing targeting campaigns and practical tools for implementation. (2014) Kenya Apparel and Textile Industry Diagnosis, Strategy and Action Plan World Bank Group and Global Development Solutions This report covers global and regional market trends in textile and apparel; the evolution, growth, and performance of Kenya’s apparel sector, including an analysis of its markets, products, and stakeholders; Kenya’s performance as measured by macro indicators, including the critical constraints faced by apparel manufacturers and 12 exporters; and recommendations. (2015) Building Competitive Green INNOVATION & Industries: The Climate and Clean Technology Opportunity ENTREPRENEURSHIP for Developing Countries World Bank Group This report offers insight to policy makers and other stakeholders seeking to develop competitive green industries in developing countries. It provides an overview and estimate of the market opportunity for climate and clean technology business in developing countries over the coming decade. (2014) 13 Public Expenditure Reviews in Science, Technology, and Innovation Paulo Correa This guidance note aims to help countries assess the quality of public spending on these areas through a framework and analysis that yield actionable measures combining institutional and policy reforms with strategic investments. (2014) Supporting Growth-Oriented Women Entrepreneurs: A Review of the Evidence and Key Challenges Xavier Cirera and Qursum Qasim This note reviews the outcomes of programs supporting female growth entrepreneurs and draws lessons from available evidence to inform the design of more effective programs. (2014) 14 INDEX Africa Competitiveness Report 2015, 8 Investment Climate in Africa: The Impact of Reform on Sub‑Saharan Africa’s Growth, 9 Building Competitive Green Industries: The Climate and Clean Technology Opportunity for Developing Countries, Investment Climate Reforms and Job Creation in 13 Developing Countries: What Do We Know and What Should We Do?, 9 Competition and Poverty: How Competition Affects the Distribution of Welfare, 2 Investment Promotion: A Guide to Investor Targeting in Agribusiness, 11 Competitive Cities for Jobs and Growth What, Who, and How, 11 Kenya Apparel and Textile Industry: Diagnosis, Strategy and Action Plan, 12 Depreciations without Exports? Global Value Chains and the Exchange Rate Elasticity of Exports, 2 Low-Income Developing Countries and G-20 Trade and Investment Policy, 4 15 The Global Trade Slowdown: Cyclical or Structural?, 3 Making Global Value Chains Work for Development, 5 Global Trade Watch: Trade Developments in 2015, 3 New Voices in Investment: A Survey of Investors from The Impact of Investment Policy in a Changing Global Emerging Economies, 10 Economy: A Review of the Literature, 9 Poverty and Shared Prosperity Implications of Deep Improving Trade and Transport for Landlocked Developing Integration in Eastern and Southern Africa, 5 Countries: A Ten-Year Review, 3 Productividad, Competitividad y Diversificación Inclusive Global Value Chains: Policy Options in Trade Productiva, 10 and Complementary Areas for GVC Integration by Small and Medium Enterprises and Low-Income Developing Public Expenditure Reviews in Science, Technology, and Countries, 4 Innovation, 13 Internationalizing Sub-Saharan Africa’s Education and The Role of Trade in Ending Poverty, 6 Health Services, 4 A Step Ahead: Competition Policy for Shared Prosperity and Inclusive Growth, 6 Supporting Growth-Oriented Women Entrepreneurs: A Transforming Markets through Competition: Review of the Evidence and Key Challenges, 14 New Developments and Recent Trends in Competition Advocacy, 7 Trade Policy and Food Security: Improving Access to Food in Developing Countries in the Wake of High World Prices, 6 Uruguay Trade Competitiveness Diagnostic, 7 Trading Away from Conflict: Using Trade to Increase Valuing Services in Trade: A Toolkit for Competitiveness Resilience in Fragile States, 6 Diagnostics, 7 16 17