This paper uses data on directional trade flows and Regional Trade Agreements (RTA) to i) estimate the effects of RTA on trade flows and ii) assess the importance of Global Value Chains for these effects.
... See More + Based on a Difference-in- Difference identification strategy, we find that RTAs are associated with: (1) an increase in trade within the region, (2) a decrease in inflows to the region, and (3) an increase in outflows from the region. The first two findings can be understood as trade creation and trade diversion due to a shift in demand associated with the lower trade barriers within the region and Rules of Origin as an implicit trade barrier for imports from the rest of the world. Global Value Chains are most relevant to understand the third finding on the increase in outflows from the region. The key determinant of the increase in outflows is the importance of the Regional Value Chains for imports of intermediates by members of the region.
See Less -
Policy Research Working Paper WPS9089 DEC 18, 2019
De Soyres,Francois Michel Marie Raphael; Maire,Julien Luc Yvon; Sublet,GuillaumeDisclosed
This paper investigates the impact of Ghana's World Trade Organization (WTO) accession on firm-level product and labor market imperfections. The paper exploits a rich dataset of firm-level information to estimate both markups and the degree of monopsony power enjoyed by manufacturing firms.
... See More + The results indicate that price-cost margins declined while the degree of monopsony power increased in the wake of WTO accession. These diverging dynamics suggest that firms compress real wages to offset loss of market power in the product market due to increased international competition. This gives rise to an increase in the market imperfection gap, which gradually erodes the pro-competitive gains from trade. The paper contributes to the literature by identifying channels through which allocative inefficiencies and misallocation can persist even after trade liberalization.
See Less -
Policy Research Working Paper WPS9079 DEC 11, 2019
Global and regional trade integration offers Pakistan tremendous potential in driving and sustaining growth and poverty reduction. Despite this potential, trade has not been effectively leveraged to catalyze growth in Pakistan in recent years.
... See More + Trends in relative trade and competitiveness have been worrying, with export earnings declining 20 percent over the period FY2011-2017 and market share contracting by 1.45 percent annually. Understanding the constraints on trade and competitiveness from the perspective of the private sector engaged in export activities is critical to developing and implementing effective trade policy. To support the Government of Pakistan in the preparation of its new Strategic Trade Policy Framework (2018-23), the World Bank Group conducted a series of private sector stakeholder consultations with current, past and potential Pakistani exporters in the manufacturing, agro processing, and services sectors. A total of 254 private sector representatives participated in four separate events organized in different provinces between September and November 2017. This note summarizes the main concerns expressed by the private sector during these consultations. The note’s main objective is to contribute to a fruitful private-public dialogue which can ultimately lend inputs for trade policy. The role of the World Bank Group in this respect is to bring together the private sector and the public sector, so that the constraints that the former face are presented to the latter.
See Less -
Recognizing that services affect the ability of countries and their firms to compete on international markets, the World Bank’s Trade and Regional Integration Unit has developed an extensive work program to promote the performance of countries’ domestic services sectors, including services trade.
... See More + Services for Trade Competitiveness presents selected applications of new methodologies that were developed to assess the competitiveness of countries’ services sectors, discern the types of barriers to services that exist in the regulatory environment, and identify the resulting policy implications. Its assessments are designed for a wide audience, including policy makers in developing countries and development practitioners in international organizations, policy-making institutions, and academia. The purpose of this book is to help developing countries make informed policy choices to increase their chances of benefiting from the increasing prominence of services in international trade.
See Less -
Global trade growth slowed in 2018 amid a weakening of economic growth in China and the Euro Area and rising trade protectionism. The volume of trade grew by 3.8 percent, down from 5.4 percent in 2017, but has shown signs of reviving in the first quarter of 2019.
... See More + However, the U.S. tariff increases implemented in early May and China’s response might change the outlook. Trade policy developments are mixed. Restrictive trade measures imposed during 2018 affected 3.8 percent of world merchandise trade, nearly three times the share affected in any of the years since the global financial crisis of 2009. Tit-for-tat tariffs between the United States and China alone affected 2.0 percent of world merchandise trade in 2018. Ongoing trade tensions affected importers in United States and China significantly. While trade fell in targeted products, prices at the border did not change as compared with non-targeted products. Even though trade in stickier inputs tends to be relatively resilient in the short term, if trade tensions are not resolved, existing global value chains are likely to be disrupted in the longer term. It is in the long-term interest of industrial and developing countries for trade tensions to be resolved through a multilateral approach and World Trade Organization reforms.
See Less -
This paper characterizes the trade-off between the income gains and the inequality costs of trade using survey data for 54 developing countries.
... See More + Tariff data on agricultural and manufacturing goods are combined with household survey data on detailed income and expenditure patterns to estimate the first-order effects of the elimination of import tariffs on household welfare. The paper assesses how these welfare effects vary across the distribution by estimating impacts on the consumption of traded goods, wage income, farm and non-farm family enterprise income, and government transfers. For each country, the income gains and the inequality costs of trade liberalization are quantified and the trade-offs between them are assessed using an Atkinson social welfare index. The analysis finds average income gains from import tariff liberalization in 45 countries and average income losses in nine countries. Across countries in the sample, the gains from trade are 1.9 percent of real household expenditure on average. We find overwhelming evidence of a trade-off between the income gains (losses) and the inequality costs (gains), which arise because trade tends to exacerbate income inequality: 45 countries face a trade-off, while only nine do not. The income gains typically more than offset the increase in inequality. In the majority of developing countries, the prevailing tariff structure thus induces sizable welfare losses.
See Less -
Policy Research Working Paper WPS8825 APR 22, 2019
This is a statement by Mr. Mukhisa Kituyi, Secretary-General of United Nations Conference on Trade and Development (UNCTAD) at the ninety-ninth meeting of the Development Committee held on April 13, 2019.
... See More + He states that the world economy carries a much heavier burden of corporate and public debt than when the crisis hit. He discussed on following topics: poor gross domestic product (GDP) performance is not due to trade frictions; stock market swings, not fundamentals; policy déjà vu: freer trade and more liquidity for stock markets; a dangerous mix: over-indebtedness and inequality; and reclaiming multilateralism for a global green new deal.
See Less -
The Arab Republic of Egypt is yet to meet its exports potential, which has been historically hampered by several domestic market distortions and multiple barriers, resulting in weak export performance and modest regional and global integration.
... See More + Although the liberalization of the exchange rate in November 2016 was a necessary step to correct the exchange rate misalignment and ease the ensuing shortages in foreign currency, it has not been sufficient to guarantee a notable improvement in export performance. This paper analyzes Egypt's exports along three dimensions that are key for export performance and future growth: (i) composition and relatedness of exported products; (ii) geographic and product concentration; and (iii) relatedness to globally traded products. The analysis suggests that Egypt continues to specialize in traditional areas of comparative advantage and limited value-added or is expanding toward products for which global demand is declining. The paper uses a gravity model to predict bilateral trade flows based on the economic size, geographic distance, and other relevant characteristics that should typically contribute to facilitated trade and identify specific sectors and markets for which Egypt seems to have an untapped potential. To understand this underperformance, the paper investigates the key impediments to meeting the export potential. It explores some of the important supply and demand side factors and assesses the role of trade policy measures (tariffs and non-tariffs barriers) in impeding export growth. The analysis reveals that despite significant liberalization efforts, Egypt remains among the group of developing countries that have the highest frequency index and coverage ratio of non-tariff measures. Policy recommendations include a call to improve external competitiveness by fostering and diversifying domestic production and complement these efforts by engaging in trade facilitation reforms to remove the non-tariffs barriers to trade, notably, the administrative, technical, and sanitary barriers to trade. These are all necessary for the country to capitalize on its competitive gains from the currency depreciation and to improve the degree of Egypt's integration into global markets.
See Less -
Policy Research Working Paper WPS8809 APR 09, 2019
This paper presents a structural general equilibrium model to analyze the effects on trade, welfare, and gross domestic product of common transport infrastructure.
... See More + Specifically, the model builds on the framework by Caliendo and Parro (2015) -- a Ricardian model with sectoral linkages, trade in intermediate goods and sectoral heterogeneity -- to allow for changes in trade costs due to improvements in transportation infrastructure, financed through domestic taxation, connecting multiple countries. The model highlights the trade impact of infrastructure investments through cross-border input-output linkages. This framework is then used to quantify the impact of the Belt and Road Initiative. Using new estimates on the effects on trade costs of transport infrastructure related to the initiative based on Geographic Information System analysis, the model shows that gross domestic product will increase by up to 3.4 percent for participating countries and by up to 2.9 percent for the world. Because trade gains are not commensurate with projected investments, some countries may experience a negative welfare effect due to the high cost of the infrastructure. The analysis also finds strong complementarity between infrastructure investment and trade policy reforms.
See Less -
Policy Research Working Paper WPS8801 APR 01, 2019
De Soyres,Francois Michel Marie Raphael; Mulabdic,Alen; Ruta,MicheleDisclosed
Agriculture forms the backbone of Pakistan’s economy. Despite the fact that the share of agriculture in the GDP has declined over the years, the sector continues to play an important role in the socio-economic structure of the country.
... See More + About 60 percent of the population lives in rural areas of Pakistan, the majority of which is dependent on agricultural activities for their livelihood. Yield growth for most crops and livestock products in Pakistan has stagnated and become more variable in recent years. Furthermore, sizable gaps persist between achievable and realized productivity in most crops, and diversification and a move to higher value-added agricultural commodities has been limited, predominantly in the crops sector.
See Less -
There are significant value chain linkages between India and Bangladesh, particularly in the textile and apparel sector. India specializes in the upstream segment, supplying such intermediate inputs as silk, cotton, yarn, and fabrics to Bangladesh.
... See More + Bangladesh specializes in the downstream final apparel segment, exporting worldwide as well as to India. Tariffs and nontariff barriers in both countries inhibit the growth of value chain linkages. In addition, subsidies and other industrial policies in India distort incentives away from the natural pattern of specialization. The results of a new survey of textile and clothing firms in both countries corroborate these findings. Reforms in trade policy (including rules of origin), trade facilitation, trade-related standards, and institutions could help both countries better take advantage of value chain linkages.
See Less -
Policy Research Working Paper WPS8731 FEB 07, 2019
