This paper analyzes Zambian export patterns using a new transaction-level trade data set for the period 1999-2011. The data show that, in international comparison, Zambian exports are exceptionally concentrated (on mining products).
... See More + This reliance has been increasing in recent years. Zambia's exports are also characterized by a high level of churning of firms and products. Multivariate models of survival probabilities suggest that exchange rate volatility and difficult access to imported inputs significantly inhibit diversified and stable exports. The econometric analysis is complemented with a qualitative study of the Zambian export sector. The analysis concludes that one of the main policy levers for unleashing Zambia's full potential as an exporter is by facilitating access to imported inputs. Additional measures that ease foreign exchange transactions, simplify export and certification requirements, and increase the predictability of Zambia's trade regime could be effective to promote Zambia's nontraditional exports.
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Policy Research Working Paper WPS7151 JAN 01, 2015
This paper focuses on the sluggish growth of world trade relative to income growth in recent years. The analysis uses an empirical strategy based on an error correction model to assess whether the global trade slowdown is structural or cyclical.
... See More + An estimate of the relationship between trade and income in the past four decades reveals that the long-term trade elasticity rose sharply in the 1990s, but declined significantly in the 2000s even before the global financial crisis. These results suggest that trade is growing slowly not only because of slow growth of gross domestic product, but also because of a structural change in the trade-gross domestic product relationship in recent years. The available evidence suggests that the explanation may lie in the slowing pace of international vertical specialization rather than increasing protection or the changing composition of trade and gross domestic product.
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Policy Research Working Paper WPS7158 JAN 01, 2015
This note analyzes the benefits of ECOWAS Common External Tariff (CET) and Economic Partnership Agreement (EPA) will outweigh costs in Nigeria, but competitiveness is the real issue.
... See More + After decade-long negotiations, the ECOWAS CET and EPA with the EU recently reached decisive milestones. These major reforms should have significant impacts and offer new opportunities to West Africa, but have so far failed to garner a broad consensus, notably in Nigeria. The lack of objective and easily accessible assessments of their likely effects appears to be partly responsible for this situation. Two recent World Bank studies use a simple methodology to assess the potential impact of these reforms on Nigeria. Overall, full implementation of the CET and EPA in Nigeria would result in limited fiscal losses, marginal welfare gains for consumers and higher profits for a majority of manufacturing firms accounting for the majority of jobs in this sector. Almost all firms experiencing negative effects exhibit higher-than-average profitability before the reforms and most would remain profitable after them. The predicted magnitude of both the CET and EPA is small compared to gains that could be achieved by tackling supply-side constraints faced by Nigerian firms. Combining trade policy reforms with an ambitious competitiveness agenda that addresses the most binding constraints and promotes regional trade appears as the best way to maximize the benefits and minimize the potential cost of these reforms.
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Working Paper (Numbered Series) 93642 JAN 01, 2015
While economic growth in developing countries over the last ten years has lifted more people out of poverty than in any previous time, more than one billion people still live in countries affected by violent conflict.
... See More + Conflict weakens governance, undermines economic development and threatens both national and regional stability. Trade shocks, in particular, can have widely varying impacts on conflict. This report sets out to empirically test these linkages between trade shocks and conflict via cross-country and intra-country analysis. On the basis of the analysis, it offers trade-related policy directions to reduce this risk in fragile economies. The results provide convincing evidence that trade and trade policy have a large impact on the risk and intensity of conflict. This report is composed of three main chapters. Chapter 1 develops a conceptual framework mapping the different channels through which trade may affect conflict and political stability. The framework is based on simple economic theory and the available empirical evidence on the impact of trade related changes on conflict and stability. It then tests this framework empirically through the analysis of cross-country data and through case studies of Nigeria and the Israeli-Palestinian conflict. The hope is that these types of intra-country analyses could be replicated in other countries, since they use data that are available in different countries, especially in sub-Saharan Africa. Chapter 2 uses the same conceptual framework to show how differences in underlying conditions affect the relationship between trade-related changes and conflict. Following a review of the literature on the drivers of conflict, it examines the importance of four groups of grievances: conditions in neighboring countries, factors increasing grievance, government institutions, and policies that affect the transmission of changes in international prices to the domestic market. These relationships are tested using cross-country data and case studies of Nigeria and the Israeli-Palestinian conflict. Finally, chapter 3 uses the existing evidence, as well as evidence generated in this report, to discuss how the policies governing trade can reduce the probability and intensity of conflicts. Two appendixes include detailed information on the modeling framework, the data issues and the estimation results.
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This paper uses a global computable general-equilibrium framework with new detail on six Levant countries -- the Arab Republic of Egypt, Iraq, Jordan, Lebanon, the Syrian Arab Republic, and Turkey -- to quantify the direct and indirect economic effects of the Syrian war and the advance of the Islamic State on the Levant.
... See More + Syria and Iraq bear the brunt of the direct economic costs, while the other Levant countries lose in per capita but not in aggregate terms. The fact that the Islamic State's spread has undermined regional trade adds to varying degrees to the direct costs in all Levant economies and in the case of Syria and Iraq doubles the welfare losses. All these countries are foregoing opportunities to expand intra-Levant trade and the associated gains in economic efficiency and diversification. The average welfare effects are not indicative of within-country incidence, which varies among workers, landowners, and capitalists.
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Policy Research Working Paper WPS7135 DEC 01, 2014
This paper investigates gender differences in the impact of Brazil's trade liberalization on labor market outcomes. To identify the causal effect of trade reforms, the paper uses difference-in-difference estimation exploiting variation across microregions in pre-liberalization industry composition.
... See More + The analysis finds that trade liberalization reduced male and female labor force participation and employment rates, but the effects on men were significantly larger. Thereby, tariff reductions contributed to gender convergence in labor force participation and employment rates. Gender differences are concentrated among the low-skilled population and in the tradable sector, where male and female workers are most likely to be imperfect substitutes.
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Policy Research Working Paper WPS7095 NOV 01, 2014
This is a statement by Mr. Roberto Azevedo, Director-General of the World Trade Organization (WTO) at the ninetieth meeting of the Development Committee held on October 11, 2014.
... See More + He discusses that the imports of developing and emerging economies have been growing faster than developed countries. Although this pace has slowed recently, they are contributing significantly to the recovery of the global economy. There is a need to create the conditions for a new wave of trade expansion, to help deepen the integration of the developing world into the global economy. The Bali package agreed by WTO members last year delivered a great deal for developing countries. This included the trade facilitation agreement which is aimed at cutting the costs of trade and easing the flows of goods. He urges ministers to keep this issue high on their list of priorities for development assistance and to recognize the contribution that it can make in generating economic growth and development.
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At the Davos forum of January 2014, a group of 14 countries pledged to launch negotiations on liberalizing trade in "green goods" (also known as "environmental" goods), focusing on the elimination of tariffs for an Asia-Pacific Economic Cooperation list of 54 products.
... See More + The paper shows that the Davos group, with an average tariff of 1.8 percent, has little to offer as countries have avoided submitting products with tariff peaks for tariff reductions. Even if the list were extended to the 411 products on the World Trade Organization list, taking into account tariff dispersion, the tariff structure on environmental goods would be equivalent to a uniform tariff of 3.4 percent, about half the uniform tariff-equivalent for non-environmental goods. Enlarging the number of participants to low-income countries might be possible as, on average, their imports would not increase by more than 8 percent. However, because of the strong complementarities between trade in environmental goods and trade in environmental services, these should also be brought to the negotiation table, although difficulties in reaching agreement on their scope are likely to be great.
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Policy Research Working Paper WPS7061 OCT 01, 2014
This paper offers a simple way to assess the impact on the economy of Nigeria of an economic partnership agreement (EPA) between the ECOWAS countries and the European Union (EU) , based on the market access offer contained in the negotiation proposals in early 2014 with the following key elements: liberalization, to the benefit of the EU, of West African market access for 75 percent of tariff lines over a period of 20 years; three categories of products subject to gradual liberalization, in four stages of five years each, starting on December 31, 2019 for the first category being liberalized and finishing in 2035 for the third category.
... See More + The fourth category of products, representing one quarter of all tariff lines, is not subject to liberalization; and possibility of recourse to trade defense measures, including bilateral safeguard measures (article 22) and an infant industry clause (article 23). The analysis presented in this paper is based on a new methodology that combines the advantages of a partial equilibrium modeling framework with the wealth of firm level information contained in a World Bank enterprise survey for Nigeria. The intention is to add value to the policy debate around the EPA by generating results that are intuitive and transparent to a non-technical audience, and that rely on a limited number of simple assumptions, while adding precision and detail to the expected impact on the domestic economy.
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Working Paper 93166 SEP 30, 2014
von Uexkull, Erik Jan; Njinkeu, Dominique; Maur, Jean-Christophe; Coste, Antoine; Shui, Lulu
There is substantial evidence that with the progressive global decline in tariffs over several decades, trade costs are a more significant barrier to trade than tariffs, especially in Sub-Saharan Africa.
... See More + This paper decomposes trade costs into three categories: costs that can be lowered by trade facilitation, nontariff barriers, and the costs of business services. The paper develops a 10-region, 18-sector, global trade model that includes Kenya, Tanzania, Uganda, and Rwanda of the East African Customs Union. The analysis finds that deep integration in the East African Customs Union that lowers these trade costs results in significant gains for the four countries, especially from improved trade facilitation. Extending the lowering of nontariff barriers and services liberalization multilaterally would increase the gains between two and seven times, depending on the country. that the analysis also finds that reducing nondiscriminatory services barriers in Kenya and Tanzania would increase welfare even more than multilateral reduction of discriminatory services barriers. The paper is innovative both conceptually and empirically. It contains foreign direct investment in services and is the first paper to numerically assess liberalization of barriers against domestic and multinational service providers in a multi-sector, multi-region, applied general equilibrium model. The paper uses new databases of the ad valorem equivalents of barriers in services and the time in trade costs. Both databases are shown to be important to the results.
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Policy Research Working Paper WPS7049 SEP 01, 2014
Balistreri, Edward J.; Tarr, David G.; Yonezawa, Hidemichi
The Middle East and North Africa (MENA) data book serves as a quick reference and a reliable dataset for monitoring economic and social developments in the region.
... See More + The data are drawn from the 2014 World Bank's World Development Indicators (WDI) and International Monetary Fund's (IMF's) direction of trade statistics. It contains macroeconomic, sectoral, and social indicators for 19 countries in the MENA region and aggregates for other developing regions. The data book presents following topics: basic indicators; national and fiscal accounts; trade; infrastructure; and human development.
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This paper uses the gravity model to analyze whether the varying export performance of Croatian counties can be explained by their proximity to border gates, ports, and other county-specific characteristics.
... See More + The analysis finds that longer distances to border gates increase trade frictions significantly for many product categories, although these frictions have been decreasing between 2007 and 2012. The paper analyzes the county specific factors that are associated with variation in export performance, net of distance. Results show that exports are strongly and positively correlated with motorway and road density, the size of the labor force, low-skill ratio, and the number of patents. These variables are also associated with a greater diversity of exports in terms of products and destinations. Several general policy implications are highlighted. The significant association between motorway and road density and export volume, number of destinations, as well as the diversity of exported products may indicate that improvements in connectivity and facilitation of transport could still play a significant role in enhancing regional trade outcomes. Similarly, good performance in research and development may significantly help to spur competitiveness and allow local producers to enter new markets in products and destinations, which in turn can increase the level of diversification and boost resilience to global economic shocks.
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Policy Research Working Paper WPS6999 AUG 01, 2014
Artuc, Erhan; Iootty, Mariana; Pirlea, Ana Florina
For a representative sample of manufacturing firms in 26 countries, this paper shows that changes in the cost of importing over time are significantly and negatively correlated with changes in the percentage of firms' material inputs that are of foreign origin.
... See More + Furthermore, the paper shows that there may be a nonlinear relationship between import costs and imports. These findings are important, as recent studies point toward a significant positive effect of imported inputs on productivity and growth. It is hoped that the present paper inspires more work on the determinants of the use of imported inputs, especially in developing countries.
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Policy Research Working Paper WPS7005 AUG 01, 2014
This paper introduces a new data set and establishes a set of basic facts and patterns regarding the trade that countries fight about under World Trade Organization (WTO) dispute settlement.
... See More + The paper characterizes the scope of products, as well as the levels of and changes to the trade values, market shares, volumes, and prices for those goods that eventually become subject to WTO litigation. The first result is striking heterogeneity in the level of market access at stake across disputes: for example, 14 percent of cases over disputed import products feature bilateral trade that is less than $1 million per year and another 15 percent feature bilateral trade that is more than $1 billion per year. Nevertheless, some strong patterns emerge from a more detailed examination of the data. Both high- and low-income complainants tend to suffer important losses in foreign market access in the products that ultimately become subject to dispute. Furthermore, although the respondent's imposition of an allegedly WTO-inconsistent policy is associated with reductions, on average, in trade values, volumes, and exporter-received prices, there is some evidence of differences in the size of these changes across the different types of policies under dispute and the potential exporter country litigants. Finally, these different types of policies under dispute can have dissimilar trade effects for the complainant relative to other (non-complainant) exporters of the disputed product and this is likely to affect the litigation allegiance of third countries.
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Policy Research Working Paper WPS6979 JUL 01, 2014
Informal trade supports the livelihood of hundreds of thousands of households in Africa, reaches markets and clients that are underserved by formal channels, and contributes to regional food security.
... See More + Despite numerous benefits, conducting cross-border transactions remains expensive for small traders in Africa. For example, small traders in Malawi and Zambia pay 62 percent more in per unit terms for border costs than large formal traders. While there are systems in place to facilitate cross-border trade such as the current Simplified Trade Regime (STR) that eases certain customs processes, a host of registration and other requirements remain in place and increase small traders' costs to uncompetitive levels. This note presents an overview of key challenges faced by small traders across Africa, and proposes the charter for cross-border traders as a potential solution to address them. Special attention is given to the case of Malawi and Zambia, where the Charter is currently being piloted by the World Bank in collaboration with the respective Governments, Traders' Associations, and border officials as part of the first joint policy action emerging from the Diagnostics Trade Integration Studies (DTIS) carried out in the two countries.
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According to a new World Bank report, economic complementarities between Egypt, Turkey, Jordan, Lebanon, Iraq, Syria, and the Palestinian Territories are significant, with substantial welfare gains expected from increased trade and investments and, ultimately, economic integration.
... See More + With a population of 224 million, a land area of 2.4 million km, a nominal GDP of 1.4 trillion dollars, and close to major markets and transportation corridors, these New Levant countries have significant economic weight and promise. There are opportunities from deeper regional integration to derive significant benefits from economic complementarities and greater competitiveness.
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The political and economic events since January 2011 have contributed to change the context in which Tunisia is shaping its own global integration agenda.
... See More + This changing landscape presents new challenges but also opportunities to advance integration in a rapidly globalizing world trade environment. Tunisia's past integration policies brought important economic benefits to the country. The EU remains the preferred partner for Tunisia and the EU market likely to generate the largest gains from deeper integration. This study attempts to present a sequence of reforms to prioritize in the context of the European Neighborhood Policy, focusing on areas in which legal and regulatory reforms can be achieved with contained costs and, together with institutional reforms, can significantly contribute to improve Tunisia's competitiveness and accelerate growth and job creation. To reach this objective, this study provides: (i) a diagnostic of the legal and regulatory framework and institutional capacity in some of the most relevant areas of interest for Tunisia, namely in services liberalization, competition policy and procurement; (ii) a qualitative assessment of the distance of the Tunisian framework from the EUs and the impact of some of the reforms covered by the Deep and Comprehensive Free Trade Agreement; and (iii) a quantitative assessment of selected key integration options. The report then presents a roadmap of the necessary steps to be taken to fill such gaps, by focusing specifically on: a) key regulatory reforms to remove barriers to trade and investment in services in Tunisia; b) competition policy and reforms options in the context of deeper integration with the EU; and c) an analysis of the current context and perspectives for opening Tunisian Public Procurement to International Markets.
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Two of the most important trade policy developments to take place since the 1980s are the expansion of preferential trade agreements and temporary trade barriers, such as antidumping, safeguards, and countervailing duties.
... See More + Despite the empirical importance of preferential trade agreements and temporary trade barriers and the common feature that each can independently have quite discriminatory elements, relatively little is known about the nature of any relationships between them. This paper surveys the literature on some of the political-economic issues that can arise at the intersection of preferential trade agreements and temporary trade barriers and uses four case studies to illustrate variation in how countries apply the World Trade Organization's global safeguards policy instrument. The four examples include recent policies applied by a variety of types of countries and under different agreements: large and small countries, high-income and emerging economies, and free trade areas and customs unions. The analysis reveals important measurement and identification challenges for research that seeks to find evidence of systematic relationships between the formation of preferential trade agreements, the political-economic implications of their implementation, and the use of subsequent temporary trade barriers.
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Policy Research Working Paper WPS6898 JUN 01, 2014
Bown, Chad P.; Karacaovali, Baybars; Tovar, Patricia
Many developing countries display remarkably high degrees of urban concentration that are incommensurate with their levels of urbanization. The cost of excessively high levels of urban concentration can be very high in terms of overpopulation, congestion, and productivity growth.
... See More + One strand of the theoretical literature suggests that such high levels of concentration may be the result of restrictive trade policies that trigger forces of agglomeration. Another strand of the literature, however, points out that trade liberalization itself may exacerbate urban concentration by favoring the further growth of those large urban centers that have better access to international markets. The empirical basis for judging this question has been weak so far; in the existing literature, trade policies are poorly measured (or are not measured, as when trade volumes are used spuriously). Here, new disaggregated tariff measures are used to empirically test the hypothesis. A treatment-and-control analysis of pre- versus post-liberalization performance of the cities is also employed in liberalizing and non-liberalizing countries. It is found that (controlling for the largest cities that have ports and, thus, have better access to external markets) liberalizing trade leads to a reduction in urban concentration.
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Policy Research Working Paper WPS6913 JUN 01, 2014
This paper examines how policy governing the liner shipping sector affects maritime transport costs and seaborne trade flows. The paper uses a novel data set and finds that restrictions, particularly on foreign investment, increase maritime transport costs, strongly but unevenly.
... See More + The cost-inflating effect ranges from 24 to 50 percent and trade on some routes may be inhibited altogether. Distance increases maritime transport costs, but also attenuates the cost impact of policy barriers. Overall, policy restrictions may lower trade flows on specific routes by up to 46 percent and therefore deserve greater attention in national reform programs and international trade negotiations.
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Policy Research Working Paper WPS6921 JUN 01, 2014