Kazakhstan is facing its greatest economic challenge since the global crisis. With oil prices at US$50 per barrel, the country urgently needs to adjust its economic model and find new sources of economic growth.
... See More + Kazakhstan main export has been crude oil, considered a low-complexity mineral products, which has made the country extremely vulnerable to shocks. For Kazakhstan to reach high income status it will need to move up the value chain and find new sources of growth. However, new opportunities are arising. China's new Silk Road initiative, renewed regional integration efforts through the Eurasian Economic Union, CAREC and WTO accession are opening up new prospects for Kazakhstan to integrate more successfully with the region and the world and to position itself as a key trade and transit corridor between Asia, Europe, and the Middle East. While Kazakhstan outperforms its regional peers in terms of overall business environment, it still ranks poorly in trading across borders. Kazakhstan is embarking on an economic transformation at a time where new global trends are reshaping economic fundamentals. As countries in Asia and Europe enhance their living standards, opportunity costs will matter more than direct transport costs, resulting in increasing opportunities to transport goods from East Asia to Europe.
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This paper investigates China's influence on local economic development in 37 African countries between 1997 and 2007. The analysis compares the average changes in economic growth, migration, spatial inequality, and welfare for mineral-rich districts, pre- and post-accession, to the corresponding changes in districts without any mineral endowment.
... See More + Using this exogenous variation, the paper shows that over 2002-07, mining activities in response to the global commodity price boom increased welfare as measured by spatial Sen Index but were insignificant for local economic growth, migration, and spatial inequality. The findings suggest that policy needs to do more to improve the local benefits of positive external shocks (such as China's World Trade Organization accession): it is not enough to assume, given Africa's high spatial inequality, that local economies will automatically benefit from higher national growth.
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Policy Research Working Paper WPS7906 DEC 05, 2016
This paper surveys empirically the broad features of trade policy in goods for 31 major economies that collectively represented 83 percent of the world's population and 91 percent of the world's GDP in 2013.
... See More + It addresses the following five questions: Do some countries have more liberal trading regimes than others? Within countries, which industries receive the most import protection? How do trade policies change over time? Do countries discriminate among their trading partners when setting trade policy? Finally, how liberalized is world trade? The analysis documents the extent of cross-sectional heterogeneity in applied commercial policy across countries, their economic sectors, and their trading partners, over time. It concludes that substantial trade policy barriers remain as an important feature of the world economy.
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Policy Research Working Paper WPS7620 APR 04, 2016
In 2015, Lao PDR is virtually unrecognizable from what it was just a decade ago. A more open, more outward trade landscape has transformed the country from a closed-off backwater into a fast-growing developing country, complete with coffee shops, restaurants, and billboards lining the streets of what is now a much busier and more lively Vientiane.
... See More + Rural-urban migration is underway as non-agricultural opportunities are on the rise. Importers and exporters are experiencing an increasing level of government transparency. Customs operations are nearly fully automated and border clearance times have been drastically reduced. As a crowning achievement—and after 15 years of negotiations, Lao PDR is now a member of the World Trade Organization (WTO), with its eyes set on establishing itself as an equal partner in the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC). The situation has improved to such an extent that the country has become a model for other Least Developed Countries (LDCs) undertaking trade reform. Optimism is in the air, and reformers know that having come so far there is still a tremendous amount to be done. Within the context of a complex and largely incomplete transition from a planned to a market economy, the strides taken by the Lao government in the relatively niche area of trade policy reform and trade facilitation merit attention. The country still has many visceral challenges to overcome. Trade reform is much less visible, quite often not a front-page story, and rarely capable of changing people’s fortunes overnight. Rather, it is a process of deliberate, subtle changes that over time provide the atmosphere for a country to bloom, and Lao PDR is blooming. Understanding the scope and scale of reform that has occurred in order for the country to reach this point is not always easy. Without looking back over the last few years, without peering deeper into the structures that have changed, it is possible to miss just how remarkable this story truly is.
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Suppose that when addressing the question of “what’s left for the WTO?,” tariff negotiators relied not on the agenda established in 2001 but instead on the terms-of-trade theory of trade agreements to identify negotiating priorities.
... See More + This paper uses the lens of the terms-of-trade theory to investigate three areas in which it is frequently alleged that currently applied tariffs remain “too high”; the implication being that the WTO’s job performance to date is incomplete. This includes applied tariffs for countries that are not members of the WTO, applied MFN tariffs for WTO members that are unbound, and applied MFN tariffs for WTO members set in the presence of large amounts of tariff binding overhang. These are almost exclusively the domain of developing countries’ own trade policies and they are collectively important; 3.5 billion people currently live in countries in which the WTO has had minimal effect for one of these three reasons. This paper builds upon recent developments in the empirical literature to present evidence—some direct, some indirect—that sheds light on each area. It then identifies specific needs for additional research to clarify policy implications for the future role of the WTO in the ever-changing international trading system.
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Policy Research Working Paper WPS7502 DEC 02, 2015
This paper examines the implications of the terms-of-trade theory for the determinants of outcomes arising under the enforcement provisions of international agreements.
... See More + Like original trade agreement negotiations, the paper models formal trade dispute negotiations as potentially addressing the terms-of-trade externality problem that governments implement import protection above the globally efficient level so as to shift some of the policy's costs to trading partners. The approach is to extend earlier theoretical models of trade agreement accession negotiations to the setting of enforcement negotiations in order to guide the empirical assessment. The paper uses instrumental variables to estimate the model on trade volume outcomes from World Trade Organization (WTO) disputes over 1995–2009. The evidence is consistent with theoretical predictions that larger import volume outcomes are associated with products that have smaller increases in foreign exporter-received prices (terms-of-trade losses for the importer) as a result of the dispute, larger pre-dispute import volumes, larger import demand elasticities, and smaller foreign export supply elasticities. Dispute settlement outcome differences are also explained by variation in institutionally-motivated measures of retaliation capacity and the severity of the free-rider problem associated with foreign exporter concentration.
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Policy Research Working Paper WPS7242 APR 20, 2015
This paper provides a detailed explanation how the law of the World Trade Organization regulates environmental subsidies with a focus on renewable energy subsidies.
... See More + The paper begins by discussing the economic justifications for such subsidies and the criticisms of them and then gives examples of categories of subsidies. The paper provides an overview of the relevant World Trade Organization rules and case law, including the recent Canada-Renewable Energy case. The paper also makes specific recommendations for how World Trade Organization law can be improved and discusses the literature on reform proposals. The study finds that because of a lack of clarity in World Trade Organizaion rules, for some clean energy subsidies, a government will not know in advance whether the subsidy is World Trade Organization-legal.
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Policy Research Working Paper WPS7060 OCT 01, 2014
This report investigates the environmental impacts of Russia's accession to the World Trade Organization. A 10-region, 30-sector model of the Russian economy is developed.
... See More + The model is innovative and more accurate empirically in that it contains foreign direct investment, imperfectly competitive sectors, and endogenous productivity effects triggered by World Trade Organization accession along with environmental emissions data in Russia for seven pollutants that are tracked for all 30 sectors in each of the 10 regions. The decomposition analysis shows that despite the fact that World Trade Organization accession allows Russia to import better technologies and reduce pollution from the "technique effect," on balance World Trade Organization accession alone will increase environmental pollution in Russia through a shift toward dirty industries (the "composition effect") and the expansion of output with its associated increase in pollution ("scale effect"). The paper assesses the costs of three types of environmental regulations to reduce carbon dioxide emissions by 20 percent. The paper simultaneously implements a central case scenario with each of the carbon dioxide emission reduction policy initiatives. The analysis finds that the welfare gains of World Trade Organization accession are large enough to pay for the costs of any of the three environmental abatement policies, while leaving a net welfare gain. But the political economy implications are that the non-market-based policies are more costly and the command and control policy, which is not well targeted, is very costly. Based on a constant returns to scale model, the estimated welfare gains are insufficient to finance the costs of environmental regulation.
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Policy Research Working Paper WPS6957 JUN 01, 2014
Bohringer, Christoph; Rutherford, Thomas F.; Tarr, David G.; Turdyeva, NataliaDisclosed
Some of the headings included in this issue of the Development Economics Prospects Group (DECPG) daily economics and financial market commentary newsletter are as follows: financial markets; high-income economies; and developing economies.
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Newsletter 74730 DEC 11, 2012
Dennis, Allen; Kim, Eung Ju; Mohapatra, Sanket; Vashakmadze, Ekaterine T.Disclosed
Tajikistan has successfully emerged from the global economic crisis. Economic activity was strong, driven by growth in industrial production and services.
... See More + Inward remittances remain a key factor in stimulating domestic consumption. Although inflation returned to single digits, it continues to be susceptible to higher global prices of key imports. The country remains vulnerable to a range of external shocks, and economic outcomes depend critically on regional trade, transport, and investment policies. Concerns remain with respect to weaknesses in the financial sector. Structural reforms continue, and transparency has increased. The outlook is generally positive, but chronic risks remain.
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Working Paper (Numbered Series) 73716 OCT 01, 2012
After 18 years of negotiations, Russia has joined the World Trade Organization. This paper assesses how the tariff structure of the Russian Federation will change as a result of the phased implementation of its World Trade Organization commitments between 2012 and 2020 and how it has changed as a result of its agreement to participate in a Customs Union with Kazakhstan and Belarus.
... See More + The analysis uses trade data at the ten digit level, which allows the first accurate assessment of the impact of these policy changes. It finds that World Trade Organization commitments will progressively and significantly lower the applied tariffs of the Russian Federation. After all commitments are implemented, tariffs will fall from 11.5 percent to 7.9 percent on an un-weighted average basis, or from 13.0 percent to 5.8 percent on a weighted average basis. The average "bound" tariff rate of Russia under its World Trade Organization commitments will be 8.6 percent, that is, 0.7 percentage points higher than the applied tariffs. Russia's commitments represent significant tariff liberalization, but compared with other countries that have acceded to the World Trade Organization, the commitments of the Russian Federation are not unusual, especially when compared with the Transition countries.
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Policy Research Working Paper WPS6161 AUG 01, 2012
Some of the headings included in this issue of the Development Economics Prospects Group (DECPG) daily economics and financial market commentary newsletter are as follows: global equities move higher amid the latest European Union (EU) agreement; and among emerging markets.
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Newsletter 73535 JUL 10, 2012
Dennis, Allen; Ju Kim, Eung; Mohapatra, Sanket; Vashakmadze, Ekaterine T.Disclosed
With the growing importance of services and foreign direct investment in services, it is important to have a framework to analyze the impact of the liberalization of barriers to foreign direct investment in services.
... See More + This paper summarizes several recent papers and builds policy-based computable general equilibrium models showing the dynamics of services, foreign direct investment and the endogenous productivity effect from services. The modeling framework shows that the liberalization of barriers against foreign direct investment in services yields welfare gains several times larger than the usual estimates from traditional computable general equilibrium models, which focus on goods trade, not foreign direct investment in services. The larger estimates are consistent with econometric evidence on the gains from services liberalization. The paper begins with a small stylized model to help understand the fundamental economics. Then it describes models developed at the request of the Russian government to assess the potential impact of Russia's accession to the WTO. Reviews of the work indicated that the modeling helped the Russian government gain public support for the WTO entry. The paper also describes a new technique that allows modelers to include tens of thousands of households in the model.
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Policy Research Working Paper WPS6012 MAR 01, 2012
This paper brings new evidence on the impact of services liberalization on the performance of manufacturing firms. Using a unique database of Ukrainian firms in 2001-2007, the authors utilize an external push for liberalization in the services sector as a source of exogenous variation to identify the impact of services liberalization on total factor productivity (TFP) of manufacturing firms.
... See More + The results indicate that a standard deviation increase in services liberalization is associated with a 9 percent increase in TFP. Allowing services liberalization to dynamically influence TFP through the investment channel leads to an even larger effect. The effect is robust to different estimation methods and to different sub-samples of the data. In particular, it is more pronounced for domestic and small firms.
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Policy Research Working Paper WPS5944 JAN 01, 2012
Over the last three decades, China's product, labor, and capital markets have become gradually more integrated within its borders, although integration has been significantly slower for capital markets.
... See More + There remains a significant urban-rural divide, and Chinese cities tend to be under-sized by international standards. China has also integrated globally, initially through the Special Economic Zones on the coast as launching grounds to connect with world markets, and subsequently through the accession to the World Trade Organization. For future policy considerations, this paper argues that its economic production needs to be spatially concentrated, and its social services need to be spread out to the interior to ensure harmonious development and domestic integration (through inclusive rural-urban transformations and effective territorial development).
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Policy Research Working Paper WPS5630 APR 01, 2011
This note provides an initial estimation of some of the economic effects of creating the Eurasian Economic Community (EurAsEC) customs union. Relying on the computable general equilibrium model from the Global Trade Analysis Project (GTAP), results of the simulations consistently support the conclusion that, as an arrangement, the EurAsEC customs union (CU) will be a gross domestic product (GDP)-reducing framework in which the negative trade-diversion effects surpass positive trade-creation ones.
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The special safeguard mechanism both quantity and price based was key in the July 2008 failure to reach agreement in the World Trade Organization (WTO) negotiations under the doha development agenda.
... See More + A stochastic simulation model of the world wheat market is used to investigate the effects of the special safeguard mechanism. As expected, the quantity-based safeguard is found to reduce imports, raise domestic prices, and boost mean domestic production in the countries that implement it. However, rather than insulating developing countries in those regions from price volatility, the quantity based safeguard increases domestic price volatility, largely by restricting imports when domestic output is low and prices are high. The quantity based safeguard shrinks average wheat imports nearly 50 percent in some regions, and global wheat trade falls by 4.7 percent. The price-based safeguard discriminates against lower price exporters and contributes to producer price instability.
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Journal Article 77643 JUN 01, 2010
Hertel, Thomas W.; Martin, Will ; Leister, Amanda M.Disclosed
