There is not yet consensus in the trade agreements literature as to whether preferential liberalization leads to more or less multilateral liberalization.
... See More + However, research thus far has focused mostly on tariff measures of import protection. This paper develops more comprehensive measures of trade policy that include the temporary trade barrier policies of antidumping and safeguards. Studies in other contexts have also shown how these policies can erode some of the trade liberalization gains that arise when examining tariffs alone. This paper examines the experiences of Argentina and Brazil during the formation of the MERCOSUR over 1990-2001. The study finds that an exclusive focus on applied tariffs may lead to a mischaracterization of the relationship between preferential liberalization and liberalization toward non-member countries. First, any "building block" evidence that arises by focusing on tariffs during the period in which MERCOSUR was only a free trade area can disappear, once the analysis includes changes in import protection arise through temporary trade barriers. Furthermore, there is also evidence of a "stumbling block" effect of preferential tariff liberalization for the period in which MERCOSUR became a customs union, and this result tends to strengthen with the inclusion of temporary trade barriers. Finally, the paper provides a first empirical examination of whether market power motives can help explain the patterns of changes in import protection that are observed in these settings.
See Less -
Policy Research Working Paper WPS7865 OCT 18, 2016
An efficient and transparent regulatory framework governing international trade is a necessary condition for countries to realize the benefits of international trade.
... See More + Over the last decade, Lao PDR has been deepening its economic ties with the global economy through the formal accession to the WTO in 2013. At the regional level, the country is committed to be full member of the ASEAN Economic Community. These agreements entailed profound changes to Lao PDR’s regulatory framework governing international trade. This report provides an overview of the incidence on NTMs on import flows in Lao PDR before and after WTO accession and identifies lingering regulatory hurdles that may still hamper the ability of the country to reap the gains of a deeper integration. Employing detailed and comparable NTM information, this note characterizes the changes in the trade related regulatory framework in Lao PDR and compares the current scheme with that of other countries in Asia. The report also combines econometric estimations of Ad-Valorem Equivalents (AVEs) of NTMs with qualitative information collected through fieldwork to identify priority measure to streamline. This report is organized as follows. Section two discusses main conceptual issues and presents the data and metrics to examine the role of NTMs in import flows. Section three, describes the trade incidence of NTMs and compares it with similar countries and with the situation prior to WTO accession. Section four combines an econometric technique with qualitative information to discuss the stringency of NTMs. Section five presents some concluding remarks and provides some recommendation for reform.
See Less -
As a small economy, Moldova’s growth and development prospects are closely related to its performance in international and regional markets. In this report the authors have looked at the export performance and competitiveness of the Moldovan economy.
... See More + This report provides an overview of Moldova’s trade competitiveness. Its objectives are twofold: (i) to present a comprehensive analysis of Moldova’s recent trade performance and (ii) to identify policy measures and interventions that can enhance the competitiveness of Moldova’s export firms and the value added of their exports. The report is divided into two main parts. Part one contains an exports outcome analysis. It assesses export performance along four dimensions that contribute to form a comprehensive picture of the sustainable competitiveness of the export sector, including (i) the level, growth, and market share performance of existing exports (the “intensive margin”); (ii) diversification of products and markets (the “extensive margin”); (iii) the quality and sophistication of exports (the “quality” margin); and (iv) the survival of export flows (the “sustainability margin”). Part two investigates constraints on Moldova’s competitiveness, focusing specifically on a series of supply-side factors, such as the role of backbone and input services and utilities, and access to finance; and the business environment, particularly government regulations affecting trade and governance and institutional quality. The rest of the report is structured as follows: Section two examines overall trends in trade flows, including the growth of exports and imports, the degree of trade openness, and the recent evolution in foreign direct investment flows. In Section three, the authors concentrate on export outcomes, analyzing the sectoral composition, the growth orientation, and degree of diversification of Moldovan exports. The authors also analyze the evolution in the quality and sophistication of exports and the survival of export relationships in different markets and sectors. In the second part of the report, the authors look at productivity dynamics of Moldovan firms in comparative perspective, and then investigate the impact of access to finance, backbone services, trade and customs regulations, and corruption on firm productivity. The authors conclude this report with policy recommendations to improve Moldova's export competitiveness and increase the product and market scope, quality, and sophistication of its export basket.
See Less -
Working Paper (Numbered Series) 103995 JAN 30, 2016
Moldova’s recent Association Agreement with the European Union (EU), which includes a Deep and Comprehensive Free Trade Agreement (DCFTA), represents an important opportunity, as well as challenges.
... See More + This analytical document has been commissioned by the World Bank Group to provide insights into potential outcomes of the DCFTA and of other trade options that Moldova has, using a Dynamic Computable General Equilibrium (DCGE) model calibrated to its economy. This paper begins by describing the general trends in economic relations between Moldova and the EU over the past 10 years, with an emphasis on trade, as well as Foreign direct investment (FDI) and labor migration. This section includes some additional facts and details that complement the Trade Competitiveness Diagnostic. In the second section, the paper presents the main elements of the DCFTA and highlights the trade commitments and concessions that the EU and Moldova undertook. It also includes a short review of available literature on the ex-ante or ex post impact assessments of other Association Agreements between the EU and third countries that have been done using CGE models. The third section presents key features of the DCGE and discusses the data used for assembling the Social Accounting Matrix (SAM). Then, the main features of the simulated trade scenarios are presented. Finally, this paper discusses the DCGE simulation results, including the effects of the various scenarios on welfare, trade, and economic activity level. Some distributional impacts are also brought into discussion. The final section concludes and makes several recommendations.
See Less -
Working Paper (Numbered Series) 103996 JAN 30, 2016
Once concentrated among a few large economies, global flows of goods, services, and capital now reach an ever larger number of economies worldwide.
... See More + Global trade in goods and services increased 10 times between 1980 and 2011, while FDI flows increased almost 30-fold. The sales from foreign-owned firms amount to $26 trillion. As many as 3,000 bilateral investment treaties have been signed to create the framework of deep agreements needed not only to facilitate the global movement of final goods and services but also to internationalize entire processes of production. All these flows have grown over time, creating increasingly dense and complex networks. This note is intended provide an overview of SACU countries’ participation and performance in GVCs, drawing on several data sources and indicators, and most importantly the recently released 189-country Eora multi-region-input-output (MRIO) database (Lenzen et al. 2012, 2013). Following this introduction, the note is structured in five additional sections. Section two discusses in greater detail the scope of the report, including the data sources and methodological approaches, as well as their respective limitations. Section three looks at structural integration in trade, including the degree to which SACU countries import and export intermediates. Section four analyzes trends in value-added exports as a first step in exploring GVC participation. Section five hones in on the core measures of GVC participation and a brief analysis of SACU countries’ position in GVCs. Finally, section six concludes by bringing together the main findings from the analysis.
See Less -
The report is structured in two parts. The first part consists of two chapters (Notes one and two), and provides an assessment of overall trade competitiveness and trade policy options.
... See More + Note one examines Moldova’s trade competitiveness. It assesses Moldova’s export performance over the last 15 years, looking at growth, diversification, sophistication and survival patterns, and benchmarking Moldova’s performance against that of comparator countries. It looks at productivity challenges that firms face, and in particular at how different dimensions of the business climate affect their productivity. Note two looks carefully at Moldova’s different trade policy options. It examines, specifically, the impact of eight alternative trade policy scenarios (including the DCFTA with the EU, the Customs Union (CU) with Russia, Belarus and Kazakhstan, and others) on GDP growth, trade growth, and inequality. It relies on a dynamic computable general equilibrium (DCGE) model for these purposes. The second part of the study consists of two additional notes (Notes three and four), which take sectoral lenses to examine trade competitiveness challenges. Note three examines the challenges of the agricultural sector in Moldova. Note four looks at the role that free economic zones (FEZ) have had on the Moldovan economy as a tool to accelerate industrialization.
See Less -
As a small economy, Uruguay’s growth and poverty reduction prospects are closely related to its performance in international markets. This report analyzes export dynamics in Uruguay over the period 2000-2013, benchmarking them against relevant comparator countries.
... See More + It looks at export outcomes through four different dimensions of export performance: (1) the evolution, composition, and growth orientation of the country’s export basket; (2) the degree of diversification across products and markets; (3) the level of sophistication and quality; and (4) the survival rate of export relationships. The report offers a number of hypotheses for an in-depth competitiveness diagnostic of Uruguay’s external sector, as well as policy recommendations to increase integration and to gain from it. In addition to the real depreciation of the peso that followed the crisis, the international prices of Uruguay’s main export products soared. This stimulated investment in technological improvements in the production of these natural-resource-intensive products. Section one analyzes the macroeconomic environment in which exporters operate in Uruguay during the period of analysis. Section two looks at level, growth, composition, and market share performance of Uruguay’s exports, as well as the country’s main trading destinations. Section three focuses on the diversification of products and markets, considering several measures of concentration, including the share of top five products and markets in exports, and the Hirschman-Herfindahl index for Uruguay’s export portfolio. Sections four and five address quality and sophistication and survival, respectively.
See Less -
Working Paper 101540 OCT 01, 2015
Portugal Perez,Luis Alberto; Reyes,Jose Daniel; Varela,Gonzalo J.Disclosed
The expansion of international trade has been essential to development and reducing poverty but the relationship between economic growth, poverty reduction and trade is not a simple one.
... See More + This publication looks into this relationship and examines the challenges poor people face in benefiting from trade opportunities. Written jointly by the World Bank Group and the World Trade Organization, the publication examines trade and poverty across four dimensions: rural poverty; the informal economy; the impact of fragility and conflict; and gender. The publication looks at how trade could make a greater contribution to ending poverty through increasing efforts to lower trade costs, improve the enabling environment, implement trade policy in conjunction with other areas of policy, better manage risks faced by the poor, and improve data used for policy-making. This report has three key messages: 1) A sustained effort to deepen economic integration and further lower trade costs is essential for ending poverty. Strong growth in developing countries will be needed to achieve the end of poverty, and trade is a critical enabler of growth, opening up opportunities for new and better work for the poor. Although great progress has been made in reducing trade costs and integrating low-income countries into the global economy, more needs to be done. 2) Lowering tariffs and non-tariff barriers between countries are essential elements of this agenda, but this must form part facing the extreme poor, and for many, their disconnection from markets, if they are to benefit from trade. This includes challenges facing women, the rural poor, those in the informal economy, and those in fragile and conflict-affected states. Thus, in order to have the greatest impact toward ending poverty, trade policy must be made and implemented in conjunction with other areas of policy. This entails deeper cooperation across sectoral lines, government agencies, and a wider range of stakeholders. 3) The World Trade Organization and World Bank Group have made substantial contributions to trade and poverty reduction. However, a great deal more remains to be done to end poverty, and both institutions and other partners need to continually review their activities to support poverty reduction to ensure they remain relevant in an ever-changing world.
See Less -
The main message of this report is that if Kazakhstan wants to take advantage of global integration and diversification opportunities, the government needs to improve its trade policy framework, its management, and its regulations.
... See More + It is also finalizing accession to the World Trade Organization (WTO) while its trade strategy includes a number of free trade agreements to be negotiated. It is an active member of the Central Asia Region Economic Cooperation (CAREC). This report is composed of three policy notes that discuss how to improve the trade policy framework, management, and regulations: note one is on the trade policy framework and recommends joining the WTO on a tariff schedule that is more liberal than Russia’s; note two postulates that to benefit more fully from the WTO membership and future regional or bilateral agreements, the institutional framework for trade policy management will need a clearer strategic vision, better coordination within the government and with private sector, and enhanced human capacity; and note three suggests that for the private sector to benefit from global integration and diversification, the government should ease the burden of regulations that affect trade (non-tariff measures (NTMs)).
See Less -
Stronger regional integration has been a policy priority in Africa for several decades. Closer trade links with neighboring countries promise to stabilize food markets, enhance profitable exchanges in light manufactures, reduce consumer prices, and help develop regional production networks.
... See More + However, the implementation of existing integration initiatives has often been lackluster, so that the economic development and poverty reduction potential from expanded intraregional trade has remained untapped. Markets remain fragmented by a range of barriers to trade and competition along the value chain of traded goods and services. Countries in Africa have committed to a process of deeper integration, but have made little progress in implementing commitments and removing barriers. This report looks at the monitoring of regional integration in Africa and argues that more effective monitoring processes for existing integration arrangements could help to raise the profile of the prevailing implementation deficits and provide policy makers and civil society with the necessary information to push for corrective action. Currently, most integration monitoring systems are scorecard-based compliance assessments. These processes are useful in determining which member countries have transposed their regional-level reform commitments into national law, but say little about changes in trade practices on the ground. Where outcome indicators are used, these generally are of an aggregate nature, such as measuring changes in the volume of intraregional trade, or focus on tariff liberalization, the original centerpiece of most regional trade agreements.
See Less -
While other emerging regions were thriving, MENA's aggregate export performance over the past two decades has been consistently weak. Using detailed firm-level export data from Customs administrations, this report explains why.
... See More + One central finding is that the size distribution of MENA's exporting firms is suggestive of a critical weakness at the top. With the exception of the top firm, MENA's elite exporters are smaller and weaker compared to their peers in other regions. The largest exporter is alone at the top-Zidane without a team. MENA countries have failed to nurture a group of export superstars which critically contribute to export success in other regions. Part of the reason behind weak export performance is the lack of a competitive real exchange rate. The deleterious effects of an uncompetitive currency can be traced all the way down to the firm, hurting expansion at the intensive and extensive margin and preventing the emergence of export take-offs. The lack of heavy weight exporters at the top of the distribution also reflects the region's failure to push for trade and business climate reforms energetically. Finally, MENA's prevalent cronyism and corruption under pre-Arab Spring regimes (at least) confirms that business-government ties led to distortionary allocation of favors and rent dissipation by beneficiary firms, with little evidence that those firms developed into national champions or helped lift the region's export performance. The possibility of state capture in itself should call for caution when advocating any form of government intervention. In contrast, some interventions, like export promotion programs show effects on small exporters. However, because these firms are marginal in trade, such programs cannot be game changers. More broadly, the success of MENA countries in promoting export growth and diversification as well as generating jobs depends heavily on their ability to create an environment where large firms can invest and expand exports and new, efficient firms can rise to the top.
See Less -
In the last decade Morocco undertook substantial, if gradual, trade liberalization by reducing tariffs, reforming trade regulations and signing free and preferential trade agreements with several regions and countries, including the United States, Turkey, the European Union and Arab countries.
... See More + This paper analyzes the impact of input tariff reduction on Moroccan exporting firms through the channel of intermediate goods. Gaining access to more varied and cheaper inputs can make exporting firms more competitive, and as a result they export more. To evaluate how this policy may impact firms' export performance, the paper analyzes the impact of input tariff reduction on different margins of trade with emphasis on export markets and product diversification. The identification of the effect of input tariffs on exports relies on a difference-in-difference estimator using heterogeneous access to import tariff exemption as a measure of different levels of exposure to input tariff reduction at the firm level. Overall, the analysis finds that firms that are relatively more exposed to input tariff perform better in those sectors with the largest input tariff reduction, with better access to markets, higher probability to survive when exporting new products in those sectors and higher export value growth.
See Less -
Policy Research Working Paper WPS7231 APR 06, 2015
Bussolo,Maurizio; Vargas Da Cruz,Marcio JoseDisclosed
The devastating civil war in Syria is arguably one of the major civil conflicts in recent times. The conflict started with protests in March 2011 and soon after escalated to a violent internal war with no end in sight to this date.
... See More + The conflict has by the end of 2014 caused well in excess of 150,000 fatalities, and 6 million internally displaced people (UN), and led 3 million refugees to move out of the country (UNHCR). Beyond the human tragedy, the conflict has disrupted the functioning of the economy in many ways. It has destroyed infrastructure, prevented children from going to school, closed factories and deterred investments and trade. The economic effects of the war extend beyond the country’s borders affecting also the neighboring countries. In particular trade is one of the main channels through which the effects of the crisis are transmitted to neighboring countries. For example, the demand for goods and services in Syria is likely to have fallen thus affecting the many exporters to Syria in neighboring countries. Moreover, to the extent that Syria has become harder to cross, the war may have made trade through Syria more difficult. At the same time producers in neighboring countries may have replaced Syrian producers in Syria and in other markets as their productive assets in Syria were destroyed. This report examines the effects of the Syrian war on the Lebanese economy via one of the most important channels through which the economic impact of the war occurs, i.e. the trade channel. In doing so, it partly updates and extends the previous economic assessment of World Bank (2013b) carried out last year. Focusing specifically on trade allows us to examine in more depth the trade effects than that report was able to do. Indeed, we go beyond the effects on aggregate and sectoral imports and exports to also examine the effects on exports at firms’ level, comparing the effects in Lebanon with those in other neighboring countries, including Jordan, Turkey and Iraq.
See Less -
This report analyzes export competitiveness in the Dominican Republic drawing from the Trade Competitiveness Diagnostic methodology (Farole and Reis, 2012).
... See More + Dominican exports fare well in terms of performance, sophistication, and survival in Special Economic Zones. Three main challenges are identified: 1) quality issues and rejection of agro exports in the US border; 2) the role of Special Economic Zones in the new decade and the lack of backward linkages; and 3) excessive concentration in terms of markets that is not addressed by a fragmented institutional setup.
See Less -
Foreign Trade, FDI, and Capital Flows Study AUS6804 MAR 02, 2015
Iwulska,Aleksandra; Jouanjean,Marie Agnes; Moberg,Lotta Malin Johanna; Reyes,Jose Daniel; Sanchez Martin,Miguel Eduardo; Ugarte Romero,Cristian; Van Der Borght,Rafael; Wagle,SwarnimSpanishDisclosed
The emergence of global value chains (GVCs) and their rapid expansion over the past two decades has transformed the global trade environment. GVCs involve task-based trade across multiple stages of the production process that take place across a number of different countries, in which multiple inputs and exports of intermediate goods and services are necessary to produce a final good, which may also be exported.
... See More + GVC-oriented trade is seen to offer significant opportunities for developing countries, especially smaller ones, to benefit from global integration by changing the nature of competitiveness. With competition for GVC investment taking place in a truly global market, factor competitiveness relative to other countries matters a lot. In this context, the purpose of this note is to shed some light for policymakers, in this case specifically in the Southern African Customs Union (SACU) countries, on where to focus efforts to drive competitiveness for GVC participation. This is a data-intensive exercise that requires indicators to represent underlying capabilities, disaggregated international trade data, and finally, a classification of which products are likely to be trade within GVCs.
See Less -
Macroeconomic conditions remained generally stable at end-2014. The growth rate is estimated at 3 percent, driven by extractive industry and services sector.
... See More + Inflation is contained at 6 percent on a year-on-year basis, although the country gradually returns to market prices of petroleum products. The tax-to-gross domestic product (GDP) ratio remains low (10.1 percent). Current expenditures continue to absorb a significant share of total spending (75 percent). Capital expenditures have been oriented towards the social sectors (education and health), agriculture, and public works. Public resources have been supported by the return of external financing. Initial estimates indicate a reduction in the deficit of the balance of payments. Credits to the economy increased by 18.8 percent. The national development plan should provide more visibility about the future intentions of the government. The price of crude on the international market sharply fell in 2014. This has accelerated the adjustment of the pump prices to the market price. This decrease in prices allows net-importing countries of petroleum products such as Madagascar, among others, to expand fiscal space, reduce import bills and lower inflation. The country should seize this opportunity to initiate reforms of energy subsidies.
See Less -
Trade is essential for Caribbean countries' development and poverty reduction. Given their small market size, they are dependent on exports to produce manufactured products at efficient scale.
... See More + And given their natural amenities, they rely on tourism as a major spur to economic activity. Trade in the Caribbean thus makes an essential contribution to increasing employment and reducing poverty by supporting growth. At the same time, the high dependence on trade also makes Caribbean economies vulnerable to external shocks. For example, the global financial crisis imposed substantial job losses in sectors such as tourism that the poor rely on for employment. This report employs several different, but complementary, empirical approaches to analyzing the impact of this emerging new trade environment on shared prosperity in the Caribbean. These include the following six topics, with each corresponding to an individual chapter: (i) assessment of the Caribbeans performance in reaping the opportunities offered by the new trade environment; (ii) identification of the main determinants of Caribbean countries trade performance; (iii) discussion of the role of innovation and access to keys services in improving the productivity of exporting firms; (iv) exploration of how regional integration and other trade agreements could boost Caribbean trade performance; (v) firm-level examination of the implications of trade for employment; and (vi) identification of which households are involved in international trade and the implications of trade for their socio-economic status.
See Less -
The LACEX dataset has been recently assembled to compute the (direct and indirect) value of the compensation of employees linked to exports for each sector/country/year.
... See More + The data has been computed on the basis of a panel of global input-output data spanning intermittent years from 1995 to 2007 from the Global Trade Analysis Project (GTAP). This represents a form of social accounting data - a variation on the social accounting matrix (SAM) where incomes are shown in the rows of the SAM while expenditures are shown in the columns. The structure of the data provides a comprehensive and consistent record of national income accounting relationships between different sectors and regions, including intermediate and final demand linkages. This structure of the dataset allows one to obtain the value added content of final output and exports, including its compensation of employees’ component. That includes both the direct and indirect compensation, based on the backward linkages of each sector with the rest of the economy. In order to obtain these labor value added measures, two intermediate multiplier matrixes need to be calculated. The first is the Leontief inverse matrix, which measures the inputs contained in a unit of final output. This matrix contains both direct and indirect inputs. Next, one needs to calculate a matrix which has the compensation of employees’ shares of total output. Using these two matrixes as multipliers one can obtain the compensation of employees’ shares of exports and final outputs. These shares are also split between skilled and unskilled workers.
See Less -
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.
See Less -
Policy Research Working Paper WPS7049 SEP 01, 2014
Balistreri, Edward J.; Tarr, David G.; Yonezawa, HidemichiDisclosed
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.
See Less -
Policy Research Working Paper WPS6979 JUL 01, 2014
