83235 Improving Trade and Transport for Landlocked Developing Countries World Bank contributions to implementing the Almaty Programme of Action A report preparing the ten-year comprehensive review June 2013 Improving Trade and Transport for Landlocked Developing Countries World Bank contributions to implementing the Almaty Programme of Action A report preparing the ten-year comprehensive review June 2013 Table of contents Abbreviations   v Preface   vii Foreword   ix Introduction   xi 1 Trade Trends in LLDCs Since the Adoption of APoA    1 2 Logistics Performance and Trade Costs    7 3 Economics Policy Priorities   11 The Cost of being Landlocked and Corridor Performance    11 Making reliable trade and transport connections: the Transit System and its policy framework.   14 Hard and soft components of the transit system    14 Transit systems and their implementation mechanisms    16 4 World Bank Project Portfolio Supporting the Aims of APoA    17 Regional Integration Projects Portfolio    18 The Africa Transport Policy Program (SSATP)    18 The Trade Facilitation Facility   21 5 Examples of Projects and Initiatives    23 South-west roads – Western Europe–Western China International Transit Corridor     23 Corridor Projects in West Africa    24 Taking a Multi-Pronged Approach to Project Design: The Example of the Nepal-India Regional Trade and Transport Project    24 Proposed Central Asia Road Links (CARs) Program    26 References   29 Annexes   31 Annex 1: List of LLDCs and Transit countries    32 Annex 2: Logistics performance of landlocked developing countries (1–5 scale)    33 Improving Trade and Transport for Landlocked Developing Countries  iii Abbreviations APoA Almaty Programme of Action NTTFC National Trade and Transport ASYCUDA Automated System for Customs Facilitation Committee Data TEU Twenty-foot equivalent unit CCTTFA Central Corridor Trade and (= standard international Transport Facilitation Agency container) CIF Cost, insurance & freight TIR Transports Internationaux ECOWAS Economic Community of West Routiers – International Road African States Transport EDI Electronic data interchange UEMOA Union Economique et Monetaire FIAS Foreign Investment Advisory Ouest Africaine – West African Service Economic and Monetary Union FOB Free on board (ship) UNDP United Nations Development GPS Global positioning system Programme ICD Inland container (or clearance) UNECE United Nations Economic Com- depot mission for Europe ICT Information communications UNESCAP United Nations Economic & and technology Social Commission for Asia & IRU International Road Transport the Pacific Union USAID United States Agency for LLDC Landlocked developing country International Development LPI Logistics Performance Index WEF World Economic Forum NCTTCA Northern Corridor Trade and WTO World Trade Organization Transit Coordination Authority Improving Trade and Transport for Landlocked Developing Countries   v Preface T he United Nations General Assembly, preparatory review process and the comprehen- in its resolution 66/214 of 22 December sive ten-year review conference itself. 2011, decided to hold a comprehensive, This report, contributed by the World Bank, is ten-year review Conference of the Almaty Pro- based on the outputs and experience of current gramme of Action in 2014. It decided that the World Bank projects and knowledge products review was to be preceded, where necessary, by relevant to the objectives of the Programme. regional and global, as well as thematic, prepara- It has been prepared for preconference activities tions in an effective, well-structured, and broad organized jointly by the World Bank and the participatory manner. In the same resolution the UN-OHRLLS, including a high level meeting General Assembly designated the UN Office organized at the World Bank headquarters on of the High Representative for LDCs, LLDCs, June 13, 2013. and SIDS (UN-OHRLLS) as the United Na- The report was prepared in the World Bank tions System-wide focal point for the prepara- by Jean-François Arvis and Virginia Tanase, tory review process. The General Assembly also under the guidance of Mona Haddad and Marc noted that United Nations system organizations, Juhel, and with contributions from Mmes. including relevant international and regional Cordula Rastogi, Karlygash Dairabayeva, Ana- development and financial organizations, within suya Raj, Nora Weiskopf, and Messrs. Charles their respective mandate, should provide nec- Kunaka, Olivier Hartmann, Gerard McLinden essary support and actively contribute to the and Dominique Njinkeu. Improving Trade and Transport for Landlocked Developing Countries   vii The Almaty Programme of Action (2003) The Almaty Ministerial Conference (2003) was the first global venue to specifically address the problems of Land- locked Developing Countries (LLDCs). It brought together Landlocked and Transit Developing Countries, Donor Countries, and International Financial and Development Institutions. The Conference, and the Programme of Action adopted at the Conference, addressed the access problem of LLDCs, with the following seven objectives: • Secure access to and from the sea by all means of transport, according to applicable rules of international law • Reduce costs and improve services so as to increase the competitiveness of their exports • Reduce the delivered costs of imports • Address problems of delays and uncertainties in trade routes • Develop adequate national networks; reduce loss, damage and deterioration en route • Open the way for export expansion • Improve safety of road transport and security of people along the corridors. In order to reach those objectives, the Programme of Action highlighted five priority policy areas that landlocked and transit countries need to address: • Transit policy and regulatory frameworks: the need for landlocked and transit countries to review their transport regulatory frameworks and establish regional transport corridors. • Infrastructure development: the need for landlocked countries to develop multi-modal networks (rail, road, air, and pipeline infrastructure projects). • Trade and transport facilitation: the need for landlocked countries to implement the international conventions and instruments that facilitate transit trade (including the WTO). • Development assistance: the need for the international community to assist by providing technical support, encouraging foreign direct investment, and increasing official development assistance. • Implementation and review: the need for all parties involved to improve their monitoring of the implementation of transit instruments, and to conduct a comprehensive review of their implementation in due course. Source: Almaty Programme of Action: Addressing the Special Needs of Landlocked Developing Countries within a New Global Framework for Transit Transport Cooperation for Landlocked and Transit Developing Countries (2003). viii   Improving Trade and Transport for Landlocked Developing Countries Foreword W e are happy to preface this docu- and an analysis of the current constraints, ment prepared for the event hosted priorities, and solutions that should be consid- on June 13, 2013, by the World ered. For instance, since 2003 the World Bank Bank Group and the United Nations Office Group has consistently financed transport of the High Representative for the Least De- infrastructure projects, in parallel with an ever veloped Countries, Landlocked Developing increasing emphasis on trade facilitation and Countries, and Small Island Developing States corridor based projects in landlocked countries (UN-OHRLLS). This event is one in a series and transit countries. The Bank has promoted preceding the comprehensive ten-year review institutional enhancement in critical areas such Conference of the Almaty Programme of Ac- as customs reform, or projects aiming at the tion to be held in 2014. reinforcement or diversification of productive Over the ten years of the Programme’s capacities. We have also invested in research existence, the World Bank Group has been and tools, to better identify the source of the actively supporting its client countries in constraints and identify the most appropriate implementing the actions contained in the solutions for alleviating the access costs. Almaty Programme and in achieving its goals. We hope the reader will find this overview This involvement goes beyond its commitment useful, and will become interested in following to an international initiative; the World Bank up with some of the World Bank’s background has actively promoted activities and projects material, so as to stimulate a debate on new ideas contributing to the objectives of the Almaty and solutions that could be implemented in the Programme of Actions because these objec- future and reflected in a possible Programme tives are very central to its own mission and its succeeding the Almaty Programme of Action. core priorities and strategies. The Almaty initiative addresses the specific needs of landlocked developing countries and Marc H. Juhel targets their access problem. This is the single Sector Manager, Transport biggest constraint to poverty reduction and Transport, Water, Information and economic integration of landlocked countries, Communication Technology Department which are among the poorest and the most fragile countries that the Bank intervenes with. Mona Haddad The present document is a short overview Sector Manager, International Trade for policy makers of the Bank’s contribution, Economic Policy, Debt and Trade Department Improving Trade and Transport for Landlocked Developing Countries  ix Introduction A ministerial intergovernmental confer- and financial support for landlocked develop- ence in pursuit of these commitments ing countries (LLDCs), as part of its broader was held in August 2003 in Almaty, program to improve the trade competitiveness Kazakhstan. The conference agreed to the Al- of all developing countries. Nearly three fifths maty Programme of Action (APoA), calling for of the 81 countries now eligible for assistance joint efforts by transit and landlocked coun- from the World Bank’s soft-loan arm, the In- tries—with substantial technical and financial ternational Development Association (IDA), assistance from other countries—to revise are directly involved in efforts to reduce the their regulatory frameworks affecting trade adverse consequences of countries’ lack of direct movements and to improve their trade-related access to the sea. Just over half are landlocked infrastructure. themselves, and the rest have infrastructure In line with the Programme of Action and used by landlocked neighbors for transit. Annex requests from member countries, the World 1 to this report provides the list of LLDCs and Bank intensified its program of policy advice their transit countries. Figure 1: Coherence of World Bank Strategies and APoA APoA WB Transport Srategy WB Trade Strategy Aims Strategic directions Priority areas 1. Secure access to and from the sea 1. Create the conditions for increased 1. Trade Competitiveness and by all means of transport according support for transport investment and Diversification to applicable rules of international governance • trade policy; trade in services as a law 2. Deepen engagement in the roads and new means to access international 2. Reduce costs and improve services highways subsector best practices and expand exports; so as to increase the competitive- 3. Increase engagement in the urban and the design and implementa- ness of their exports; transport subsector tion of specific actions to address 3. Reduce the delivered costs of 4. Diversify engagement in transport for market and information failures imports; trade 2. Trade Facilitation, Transport Logistics 4. Address problems of delays and • support public and private infrastruc- and Trade Finance uncertainties in trade routes; ture investment to overcome physical • to reduce the costs associated 5. Develop adequate national or quality bottlenecks in transport so with moving goods along networks; as to enable regional and internation- international supply chains, 6. Reduce loss, damage and al trade in goods and services whether these are measured in deterioration en route; • increased attention to transport terms of time, money, or reliability 7. Open the way for export expansion; services • to enhance the performance of 8. Improve safety of road transport • develop the institutional capacity to trade corridors used by land-linked and security of people along the implement transport and logistics developing countries, especially in corridors. strategies Africa • corridor approaches used in designing 3. Support for Market Access and the strategies for major trade routes International Trade Cooperation 5. Transport and climate change: control 4. Managing Shocks and Promoting emissions and mitigate impact Greater Inclusion Improving Trade and Transport for Landlocked Developing Countries   xi In the years that followed this major de- and consistently supported by all of the Bank’s cision, the Bank adopted its strategies in the projects. areas of transport and trade respectively: the Transport Business Strategy for 2008–2012 “Safe, Clean, and Affordable… Transport for De- Structure of the report velopment” and the Trade Strategy 2011–2021 “Leveraging Trade for Development and Inclu- The report is divided into six sections. sive Growth”. Section One provides a comparison of The two World Bank Strategies and the landlocked developing countries (LLDCs) and APoA have the same overarching objective: to transit countries in terms of trade performance. support the countries targeted by the proposed It particularly focuses on the growth of total objectives and actions, in order to achieve inclu- trade and GDP per capita in light of trade sive and sustainable development. openness and export diversification. 1. APoA objective: to address the special This is followed in Section Two by an needs of landlocked developing countries assessment of logistics performance and trade and establish a new global framework costs of landlocked countries, and their transit for action for developing efficient transit and coastal neighbors, on the basis of the Lo- transport systems in landlocked and transit gistics Performance Index (LPI). developing countries, taking into account The operational challenges for traders in the interests of both landlocked and transit LLDCs, including unreliable supply chains developing countries. and delays, as well the underlying causes, are 2. World Bank’s Transport Strategy objec- discussed in Section Three. tive: to help partner countries to establish Section Four then focuses on the vari- the governance, strategies, policies, and ous activities of the World Bank to address services that will deliver transport for de- the key priorities of the Almaty Programme, velopment in a way that is economically, with a focus on regional integration and trade financially, environmentally, and socially facilitation. sustainable. In continuation, Section Five highlights 3. World Bank’s Trade Strategy overall goal: some of the regional integration and trade fa- to better help developing countries use cilitation projects and initiatives that are being trade as an instrument for inclusive growth. implemented. The aims of the Almaty Programme of The report concludes by re-emphasizing Action were duly taken into consideration and the continued validity of several of the origi- reflected in the strategic directions and priority nal APoA priorities for financial and technical areas by both World Bank Group Strategies, assistance, in the context of the World Bank’s and their achievement has been coherently overall strategic goals (Section Six). xii   Improving Trade and Transport for Landlocked Developing Countries Trade Trends in LLDCs Since Section the Adoption of APoA 1 T his section provides evidence of the trade performance of landlocked developing coun- tries compared with others, especially their transit neighbors. In the last decade, the total trade and GDP per capita of LLDCs has increased faster in percentage terms than the global and, to some extent, the transit country averages. However, as the diversification of exports has not changed significantly since implementation of the Almaty Programme, much of the LLDC growth can be at- tributed to benefits from the commodity boom and increases in commodity prices. The two large concentrations of landlocked developing countries are located in Sub-Saha- ran Africa and Central Asia. The 15 countries in Sub-Saharan Africa have a population of more than 200 million, nearly 30 percent of the region’s total. The nine landlocked countries in Central Asia and Eastern Europe have a popu- global average of 1.5 percent, and the average lation approaching 80 million people, or about growth rate for all low-income countries of 3.1 17 percent of the region’s total. percent. It also slightly exceeded the average Recent research that distinguishes between growth rate (of about 3.4 percent) of the 27 resource-rich and resource-scarce LLDCs transit countries. shows that over the period from 1960 to 2000 In absolute value terms, increase in per resource-scarce and resource-rich landlocked capita income was comparable to that of the countries have performed worse than the coast- lower-middle income countries, the major al resource-scarce economies. Resource-scarce increases were experienced by Bhutan and Ka- LLDCs outside of Africa average 1.5–2.0 zakhstan (see Table 1). percentage points per year slower per capita In 2011, the per capita income of LLDCs income growth than coastal countries. The was 15.6 percent of the global average. Given LLDCs of Sub-Saharan Africa, which are re- the dire consequences of the global financial source-scarce (that is, all 15 except Botswana, crisis, the objective of the Almaty POA to Zambia, and Zimbabwe) typically, experienced increase the share to 25 percent of the global twice as much negative growth differential, average by 2013 does not appear feasible. indicating no sustained growth over the entire Since 2000, the value of total trade (ex- 40-year period.1 ports plus imports) of LLDCs has increased Since 2000, the average per capita income almost 6-times (at an average growth rate of 31 landlocked countries has increased by of 18.8 percent per year), which is similar to about 3.8 percent per year (mainly in the Cen- tral Asian countries of Kazakhstan and Turk- menistan), which significantly exceeded the 1 Collier, P (2007). Improving Trade and Transport for Landlocked Developing Countries   1 Table 1: GDP per capita and its growth, 2000–2011 Average per capita income (constant 2000 US$) Average growth rate (percent) 2000–2006 2007–2011 2000–2011 Income group 2000 2006 2011 Increase (percent) (percent) (percent) High income 25,195 27,655 27,671 2,475 1.8 0.04 1.1 Upper middle income 1,943 2,617 3,423 1,480 5.1 5.5 5.3 Lower middle income 594 751 937 343 3.8 4.5 4.1 Low income 258 305 364 107 2.6 3.6 3.1 Landlocked developing 608 786 953 345 3.6 4.1 3.8 countries: Sub-Saharan Africa 523 612 673 150 1.9 2.5 2.1 Central Asia 570 852 1,136 566 5.4 6.9 6.1 South Asia 497 629 860 363 3.2 5.8 4.3 Transit 1,564 1,925 1,976 411 3.5 3.3 3.4 World 5,285 5,859 6,104 818 1.9 0.9 1.5 LLDC share of the world 11.5 13.4 15.6 4.1 n.a. n.a. n.a. average (percent) Source: World Development Indicators, 2013. Note: GDP per capita is given in constant 2000 US$. Landlocked countries of Kazakhstan and Uzbekistan have been also counted as transit countries. Table 2: Landlocked developing countries: merchandise trade, 2000–2011 Merchandise Trade Merchandise export trade Share of world trade (percent) Annual Share of world trade (percent) Annual growth growth Country group 2000 2006 2011 (percent) 2000 2006 2011 (percent) High income 79.7 73.6 67.1 8.9 78.7 72.0 66.6 9.0 Upper middle income 15.5 20.8 25.2 15.8 16.4 22.8 26.5 15.9 Lower middle income 4.3 5.1 6.9 15.8 4.5 4.8 6.4 14.7 Low income 0.5 0.5 0.7 14.6 0.4 0.4 0.6 14.4 Landlocked developing countries: 0.5 0.8 1.1 18.8 0.5 0.8 1.2 21.1 Sub-Saharan Africa 0.32 0.25 0.23 14.4 0.001 0.002 0.002 14.6 Central Asia 0.38 0.45 0.44 21.1 0.002 0.004 0.006 23.1 South Asia 0.06 0.04 0.04 13.0 0.0001 0.0001 0.0001 6.9 Transit 10.3 16.3 21.7 18.6 10.9 17.7 22.3 18.3 World 100.0 100.0 100.0 10.6 100.0 100.0 100.0 10.8 Source: World Development Indicators, 2013. the increase in the value of total trade of the from 0.5 percent in 2000 to 1.1 percent in transit countries (18.6 percent per year) and 2011; however, it remains very small. The share is much higher than the global increase in to- of the transit countries, on the other hand, has tal trade of 1.7 times (10.6 percent per year). increased from 10.3 percent in 2000 to 21.7 The LLDC share of world trade has increased percent in 2011. 2   Improving Trade and Transport for Landlocked Developing Countries The export value of merchandise trade of are responsible for its greater trade volumes.2 LLDCs has increased almost seven-fold since In addition, its GDP has increased 7-fold from 2000 (21.1 percent per year) compared with a US$ 0.86 to US$ 6.52 bln. six-fold increase for the transit countries (18.3 Even though, according to the data, LL- percent per year), and a three-fold increase in DC’s large growth-rate lag in the final decades the export value of a global merchandise trade of the past century started to reverse after 2000, (10.8 percent per year). Among the LLDCs, the new pattern seems to reflect the boom in the Central Asian countries have experienced minerals and energy demand. Most of the in- the most increase in value of merchandise ex- crease in the per capita income and the export ports (almost 8-fold), followed by Sub-Saharan performance has been accompanied by increas- countries (4-fold increase). The export share in es in commodity prices and in the volumes total trade of LLDCs has increased from 47 exported by LLDCs. This was the case until percent in 2000 to 55 percent in 2011. mid-2008, when the financial crisis caused a In terms of trade openness, among the sharp decline in commodity and raw material LLDCs, the Central Asian countries have expe- prices, which had a great impact on some re- rienced a larger influence of trade on domestic source-rich LLDCs. As the global economy re- activities, which is similar to that of high-income covers, commodity prices are expected to climb developing countries (see Table 3). However, again: the overall LLDC trade value recovered while the overall trend among the LLDCs and in the first half of 2010 almost to the level of other countries has been an increase in the trade 2008 before the crisis occurred. openness index, in the Central Asian countries, While it is difficult to generalize the impact the index has been declining. The main reason on the exports of all LLDCs, because of the wide for that is a decline in Tajikistan’s share of ex- range of commodities and products, it seems that ports and imports as percent of GDP (204.4 the diversification of exports has not changed percent in 2000 vs. 79 percent of GDP in 2011). significantly since implementation of the Almaty Since Tajikistan is constrained in its capacity to export hydroelectric power, the country, in fact, overtrades. As a result large exports of ener- 2 Tajikistan Trade Diagnostic Study, World Bank gy-intensive aluminum and imports of alumina (2005). Table 3: Landlocked developing countries: trade openness, 2000–2011 (percent) Average trade openness in goods (percent of GDP) Income group 2000 2006 2011 Increase Annual growth High income developed 34.6 41.3 45.3 10.7 2.8 High income developing 77.1 90.0 97.7 20.6 2.4 Middle income 39.8 54.1 46.6 6.8 1.8 Low income 39.5 45.9 51.3 11.8 2.9 Landlocked developing: 57.3 66.5 69.7 12.4 2.1 Sub-Saharan Africa 48.4 56.3 61.8 13.4 2.3 Central Asia 102.1 88.2 78.3 –23.8 –1.9 South Asia 52.6 62.4 75.5 22.9 3.8 Transit 47.4 57.7 59.5 12.1 2.2 World 39.7 48.1 51.5 11.8 2.7 Source: UNCTAD. Note: data for landlocked countries excludes Afghanistan and Turkmenistan, data for transit countries excludes Tanzania. Based on simple average. Improving Trade and Transport for Landlocked Developing Countries   3 Programme. In about 20 percent of LLDCs, Republic, Zimbabwe, and Uganda, where the top three products make up for 90 percent or more five export products account for about half the of the total value of their exports. In about one total export value (see Table 4). The main reason third of the countries, the top three products for this is a diversification into manufactured constitute more than 75 percent. The notable products, along with adding higher product value exceptions include Moldova, Macedonia, Kyrgyz to the exported agricultural and mineral goods. Table 4: LLDCs: Share of top five export products in total goods exports 2006–2009 Country 2005–2008 latest Description Afghanistan – – 659-Floor coverings (90%), 75-Spices (7%), 222-Oil seeds (3%), 291-Crude animal mat (0%) Armenia 67.31 70.03 671-Pig iron (20%), 112-Alcoholic bev (14%), 667-Pearls/gems (14%), 283-Copper ores, conc. (10%), 682-Copper (6%) Azerbaijan 91.2 97.7 333-Petrol, crude (92%), 334-Hvy petrol (4%), 691-Iron/stl/alum. struct (0%), 57-Fruit/nuts (0%), 793-Ships (0%) Bhutan 97.41 97.41 351-Elec current (49%), 75-Spices (46%), 57-Fruit/nuts (1%), 672-Prmy/prods iron/stl (1%), 273-Stone/sand/gravel (1%) Bolivia 72.56 73.57 343-Natural gas (41%), 287-Base metal ore (17%), 333-Petrol, crude (6%), 81-Animal feed (5%), 289-Precious metal (4%) Botswana 90.83 89.86 667-Pearls/gems (65%), 284-Nickel ores (15%), 283-Copper ores, conc. (3%), 845-Artcls apparel (2%), 11-Beef (2%) Burkina Faso – – Gold, cotton (60%) Burundi 77.15 71.54 71-Coffee (80%), 74-Tea (9%), 263-Cotton (3%), 971-Gold (1%), 287-Base metal ore/conc. (1%) C. African Republic – –   Chad – – Oil, cotton Ethiopia(excl. Eritrea) 77.04 77.76 coffee and non-traditional exports including oilseed, pulses, flowers, and gold Kazakhstan 74.66 73.01 333-Petrol, crude (61%), 671-Pig iron (4%), 682-Copper (4%), 334-Hvy petrol. (3%), 41-Wheat/meslin (2%) Kyrgyz Republic 55.2 55.54 Gold (55%) Lao PDR – – copper, gold, clothing and coffee Lesotho – – clothing Macedonia, FYR 47.14 48.97 671-Pig iron (19%), 673-Flat roll. ir/st prod (10%), 842-Wmn cloth wvn (10%), 841-Menswr wvn (6%), 334-Petrol/bitum oil, crude (5%) Malawi 80.49 82.16 121-Tobacco, raw (67%), 61-Sugar etc (6%), 74-Tea (4%), 263-Cotton (3%), 222-Oil seeds (2%) Mali 96.05 95.95 971-Gold (75%), 263-Cotton (11%), 1-Live animals ex fish (6%), 334-Hvy petrol. (1%), 723-Civil engine plnt (1%) Moldova 36.25 31.12 112-Alcoholic bev (12%), 773-Elecl dist eqpt (6%), 57-Fruit/nuts (5%), 842-Women cloth wven (5%), 845-Artcls apparel (4%) Mongolia 83.23 85.47 283-Copper ores, conc. (43%), 287-Base metal ore (14%), 971-Gold (12%), 268-Wool/other (10%), 971-Coal (6%) Nepal – – Readymade garments and woolen carpets Niger 86.08 87.6 286-Uranium (58%), 1-Live animals ex fish (9%), 269-Worn cloth etc (6%), 652-Cotton fab, wvn (5%), 971-Gold (4%) (continued on next page) 4   Improving Trade and Transport for Landlocked Developing Countries Table 4: LLDCs: Share of top five export products in total goods exports (continued) 2006–2009 Country 2005–2008 latest Description Paraguay 70.57 72.42 222-Oil seeds (37%), 11-Beef (14%), 421-Fixed veg oil/fat, soft (13%), 81-Animal feed (13%), 44-Maize. (4%) Rwanda 87.16 88.03 287-Base metal ore (34%), 74-Tea (31%), 71-Coffee (14%), 112-Alcoholic bev (5%), 54-Vegetables (3%) Swaziland 71.52 71.52 Meat, sugar, textiles, citrus, and timber products Tajikistan – – Cotton and aluminum (80%) Turkmenistan – – Hydrocarbons (90%), cotton fiber Uganda 52.06 53.38 71-Coffee (23%), 34-Fish (7%), 661-Lime/cement/constr. mat’l (5%), 764-Telecom eqpt (4%), 121-Tobacco, raw (4%) Uzbekistan – – Gold, natural gas, and cotton Zambia 86.54 86.36 682-Copper (66%), 283-Copper ores, conc. (12%), 699-Base metal many (6%), 121-Tobacco, raw (2%), 61-Sugar etc (1%) Zimbabwe 55.9 48.4   Country Groups: High income 50.06 Lower middle income Export 61.52 Upper middle income 56.45 Low income Export 71.18 World 57.6 Source: World Trade Indicators 2009/2010, World Bank. Improving Trade and Transport for Landlocked Developing Countries   5 Logistics Performance and Section Trade Costs 2 T his section provides evidence on the logistics performance and trade costs of landlocked countries and their transit and coastal neighbors, as well as on factors explaining differ- ences in performance. There have been positive changes with regard to LPI performance; however, there is still no convergence between landlocked and transit countries. In terms of trade costs, landlocked developing countries tend to have higher trade costs, compared to transit coastal countries. The decrease in trade costs with the U.S. and Germany experienced by transit countries between 2000 and 2009 has been almost double of that experienced by LLDCs. First used in 2007, a Logistics Performance Index (LPI) is based on information from mul- tinational freight forwarders and the main ex- press carriers with worldwide operations. They provide an international benchmark for com- paring logistics performance and effectiveness in facilitating trade across 150 countries. Box 1: Logistics Performance Index (LPI) Tables 5 and 6 compare the logistics per- formance of landlocked and coastal countries, globally and regionally. The overall Logistics Performance Index (LPI) is a composite index based Annex 2 provides the LPI for all LLDCs on performance of countries on six dimensions (indicators) of trade-re- and compares their performance with reference lated logistics performance. The indicators are: groups of countries. • Efficiency of customs and other border agencies in expediting cargo From the comparison of logistics perfor- clearance. mance of landlocked and coastal countries by • Infrastructure efficiency (in the quantity and quality of transport in- region, it appears that between 2007 and 2012 frastructure and information technology infrastructure for logistics). LLDCs have experienced the largest increase • Ease and affordability of arranging international shipments. in LPI (13 percent), which significantly exceeds • Competence of the local logistics industry, where the freight forward- ing operations are subcontracted to domestic agencies by the global the increase in LPI for transit coastal countries logistics companies. (7 percent). • Ability to track and trace international shipments while the shipment However, in absolute terms, the LPI score is en route. for landlocked developing countries has been • Timeliness of shipments in reaching destination. historically lower than the LPI score of the Logistics performance is evaluated on a 5 point scale, with 1 the lowest corresponding transit coastal countries, and the and 5 the highest. This data is corroborated by factual information from increase in LPI for LLDCs between 2007 and domestic sources, for instance on time, cost, or effectiveness of process 2012 constitutes only 0.28. and services. On average, one LPI point less on this scale is the equiva- In comparison, the LPI score of the high lent of six days more to import and three days more to export. income countries has hardly varied, while the Improving Trade and Transport for Landlocked Developing Countries   7 Table 5: Logistics Performance Index by income group, The difference between landlocked and 2007–2012 coastal countries in Sub-Saharan Africa has declined as well (from eight percent in 2007 Growth to two percent in 2012). Coastal countries, Income group 2007 2010 2012 Change (%) with the exception of South Africa, experience High income – OECD 3.73 3.73 3.69 –0.04 –1 serious problems with port congestion, which High income – non OECD 3.25 3.24 3.24 0.01 0 leaves them with no particular advantage over Upper middle income 2.66 2.80 2.83 0.17 6 landlocked countries. Table 7 provides detailed information on Lower middle income 2.47 2.59 2.61 0.14 6 some components of the LPI. In Sub-Saharan Low income 2.26 2.43 2.43 0.17 8 Africa, logistics competence seems to be the Landlocked developing countries 2.18 2.45 2.46 0.28 13 main driver behind the gap between coastal Transit coastal countries 2.65 2.79 2.84 0.19 7 transit and landlocked countries in 2012. In World 2.74 2.87 2.86 0.12 4 terms of the infrastructure and customs, the gaps in these components in 2012 constitute Source: World Bank. about 1 percent. In South Asia, the difference seems to stem from all three LPI components considered, but LPI score of the middle income countries has the gap for the customs component has been grown by about six percent and that of the low declining the fastest between landlocked and income countries by a slightly higher rate of developing countries between 2007 and 2012 eight percent. (from a 40 percent difference in 2007 to an 11 There is still strong evidence that land- percent difference in 2012). As for other compo- locked countries remain at logistics disadvan- nents, the gap has been declining as well, which tage when compared to their transit developing is a good improvement (from 42 percent in 2007 countries. This disadvantage seems however to to 22 percent in 2012 for logistics competence decline over time (Table 6). The decline is par- and from 50 percent in 2007 to 20 percent for ticularly pronounced in South Asia, where one infrastructure in 2012). In Central Asia, a clear can observe a drop from a 43 per cent penalty improvement in all LPI components can be ob- in 2007, when compared with coastal countries, served from 2007 to 2012, especially in terms of to a 19 per cent in 2012. This is mainly due to a customs (a 29 percent increase). very poor score for Afghanistan in 2007 (1.21, The difference in size and endowments of ranking last over 150 countries), which then the economies is not the only explanation for almost doubles in 2010–2012 (to 2.25). differences in volume of trade or diversification Table 6: Logistics Performance Index of coastal and landlocked countries Regional average Landlocked countries Coastal countries Coastal advantage over landlocked (%) Region 2007 2012 2007 2012 2007 2012 2007 2012 World n. a. n. a. 2.44 2.65 2.83 2.92 16 10 Sub-Saharan Africa 2.35 2.47 2.23 2.44 2.40 2.49 8 2 East Asia and Pacific 2.58 2.78 2.17 2.38 2.65 2.85 22 20 Latin America and the 2.57 2.68 2.44 2.56 2.58 2.70 6 5 Caribbean South Asia 2.30 2.53 1.84 2.27 2.64 2.69 43 19 Source: World Bank. 8   Improving Trade and Transport for Landlocked Developing Countries Table 7: LPI in regions with poorly performing landlocked countries Sub-Saharan Africa South Asia Central Asia Landlocked Coastal Landlocked Landlocked Coastal Background data 2007 2012 2007 2012 2007 2012 2007 2012 2007 2012 Overall LPI 2.23 2.44 2.40 2.49 2.14 2.58 1.84 2.27 2.64 2.69 Selected LPI components: Logistics competence 2.21 2.35 2.38 2.46 2.11 2.52 1.84 2.22 2.69 2.71 Infrastructure 1.92 2.26 2.20 2.28 1.98 2.43 1.61 2.04 2.42 2.45 Customs 2.08 2.29 2.27 2.30 1.99 2.56 1.69 2.24 2.34 2.49 Source: World Bank. of trade patterns. Rather distance, and also sup- From looking at the rankings, trade costs ply-side constraints and inefficiencies, especially inversely correlate with the level of income, in supply chains, play an important role. One and landlocked developing countries tend to effective way to look at the question is to esti- have higher trade costs compared to transit mate bilateral trade costs between countries in coastal countries. The difference is not negli- the region. The trade cost is the price equivalent gible—the landlocked countries’ trade costs of the reduction of international trade as com- are over 1.5-times those of the corresponding pared with the potential implied by domestic transit countries. production and consumption in the origin and Even though there has been a decrease in destination markets. Higher bilateral trade costs trade costs of LLDCs with the United States result in smaller bilateral trade flows. The recent- and with Germany (9.2 percent and 8.2 percent ly published World Bank-UNESCAP dataset respectively) between 2000 and 2009 (see Table proposes comprehensive measures of trade costs 8), the decrease in trade costs of transit countries for 178 countries over the 1995–2010 period. with these countries is almost double of that of The trade costs are ad valorem equivalent com- LLDCs (19.7 percent and 12.2 percent). The puted from trade and production data. Trade trade costs of LLDCs with Japan between 2000 costs in this construction are symmetric. and 2009 have increased slightly (2.4 percent). Table 8: Trade costs with main trading countries by income group, 2000–2009 With USA With Germany With Japan Income group 2000 2009 % change 2000 2009 % change 2000 2009 % change High income – OECD 102.7 105.5 2.7 68.0 54.6 –19.7 128.0 133.3 4.1 High income – non OECD 143.9 150.8 4.8 161.7 156.9 –3.0 169.0 193.4 14.4 Upper middle income 150.2 153.4 2.1 172.2 154.4 –10.3 227.4 222.8 –2.0 Lower middle income 183.4 178.9 –2.5 195.4 188.6 –3.5 247.5 243.0 –1.8 Low income 288.3 238.4 –17.3 229.5 216.8 –5.5 292.3 286.7 –1.9 Landlocked developing 270.5 245.6 –9.2 237.3 217.9 –8.2 322.6 330.5 2.4 countries Transit coastal countries 177.3 142.3 –19.7 151.5 133.0 –12.2 203.2 181.1 –10.9 World 175.7 166.3 –5.4 169.8 157.7 –7.1 218.7 220.4 0.8 Source: World Bank 2012 Trade Costs Database. Trade costs are percentage ad valorem. Improving Trade and Transport for Landlocked Developing Countries   9 Table 9: Trade costs of landlocked and coastal countries by region, 2009 With USA With Germany With Japan Coastal Coastal Coastal Coastal advantage Coastal advantage Coastal advantage Region LLCs countries (%) LLCs countries (%) LLCs countries (%) World 221.5 154.8 30 175.6 163.4 7 287.0 202.0 30 Sub-Saharan Africa 280.7 238.5 15 237 219.7 7 338.4 275.4 19 East Asia and Pacific 171.7 141.4 18 191 193.4 –1 201.1 140.7 30 Latin America and the 157.5 125.0 21 209.3 213.5 –2 245.0 210.4 14 Caribbean South Asia 283.2 156.9 45 320.1 142.6 55 299.8 174.6 42 Source: World Bank 2012 Trade Costs Database. Trade costs are percentage ad valorem. The trading partner with which the trade stems mainly from Bhutan, which experiences cost advantage is observed to a lesser extent is trade costs that are 1.5–2 times the trade costs Germany, with a seven percent coastal advan- of Nepal and Afghanistan. However, leaving tage in global average. The coastal advantage in out Bhutan does not considerably reduce the terms of trade costs with Germany is non-ex- gap as compared to other regions: it goes down istent in the East Asia and Latin American to 30 percent when looking at trade with the regions. Coastal transit countries in South Asia, United States, to 40 percent with Germany, and on average, demonstrate the largest trade cost it stays approximately the same in the case of advantage (more than 40 percent) when com- trade with Japan. pared to landlocked countries. This difference 10   Improving Trade and Transport for Landlocked Developing Countries Section Economics Policy Priorities 3 T raders in LLDCs may be confronted with The Cost of being Landlocked and bad infrastructure or long distances to mar- Corridor Performance ket, but the main sources of higher cost have to do with unreliability of supply chains and deliv- “Transit system” refers to the infrastructure, ery of goods. The main factors behind unreliability legal framework, institutions, and procedures include a lack of proper implementation of a transit serving trade corridors. system, procedural complexity, and an inefficient Traditionally, the access problem of land- market for services such as trucking. The priorities locked developing countries has been posed in to address these inefficiencies in the supply chain of terms of additional transportation costs, due to LLDCs include transit and trade facilitation at the distance that international trade of LLDCs regional and national levels, trucking reforms, and covers inland through transit countries (Limao, enhanced cross-border cooperation on corridors. Sachs). Recent research initiated at the World Over the period of the APoA, considerable Bank (Arvis et al., 2010), rather proposes to experience and knowledge have been gained re- take the perspective of traders, and looks not garding the nature and magnitude of the costs just at transportation but at the entire logistics of being landlocked, as well as the solutions that of supply chains linking landlocked countries work or do not work, to improve the access and to international and regional markets. To assess integration of landlocked countries the total logistics costs actually supported by The World Bank has invested in significant traders and passed to the economy of LLDCs, research and stocktaking of experience in these the supply chain performance is addressed in two directions. terms of cost, delays, and reliability. References The conceptual framework for analyzing LLDCs’ prob- Connecting Landlocked lems with access to trade has been developed through Developing Countries to a series of books, taking lessons from experience and Markets, Trade Corridors economic research centered on the Almaty Programme. in the 21st century, (Arvis 2011) is a review of the The Cost of Being Land- policies and implemen- locked, Logistics Costs tations constraints to and Supply Chain Reliabil- improve the integration ity, (Arvis 2010), takes the of LLDCs with focus on perspective of traders in transit corridors. It also LLDCs, analyzes the supply compares the situations chain bottlenecks on trade across regions. corridors, and breaks down the sources of costs sup- ported by the LLDCs. Improving Trade and Transport for Landlocked Developing Countries   11 Indeed LLDCs’ trade has to support the For traders, the low reliability of transit supply cost of transportation over several hundreds chain is more worrisome than the average tran- or thousands kilometers. It adds typically a sit time. For instance, retail operators (e.g. local few percent to the cost of trade in the value supermarkets) have to maintain several months of goods, but generally much less than often inventory in LLDCs instead of a few weeks in quoted (10 to 30 percent), and the cost of trans- developed markets. The lack of supply chain reli- portation service per km of container or trailer ability makes it extremely difficult for LLDCs to is not necessarily much higher for LLDCs integrate in value chains. Transformation activi- than for developed countries. Delays on transit ties, including light manufacturing, need to stick corridors can be significant (from one to a few to stringent delivery schedules for shipments. weeks), primarily due not to the infrastructure but to time spent in ports, to clear goods at destinations, and to a lesser extent at borders in What are the sources of costs and between. Yet these delays are on average much unreliability, and how can they shorter than shipping time from a port to a des- be analyzed? tination market in Asia or Europe. The primary sources of LLDCs’ access costs What makes LLDCS stand apart is the are found by examining the inner workings of very low reliability of their supply chain. The the corridor and its institutions, notably those probability of something going wrong en route involved in moving goods and regulating vehi- is high: containers getting held up for controls, cles, as well as by looking at mechanisms and breakdown of equipment, or even stolen cargo. incentives for cooperation between participants The processes and activities in the supply chain in the corridor supply chain: traders, transport are themselves quite unpredictable. An average companies, and customs and control agencies. delay does not mean as much as the high stan- LLDCs depend on relatively complex and dard deviation in delays; in fact the distribution extended supply chains, which are very vulnera- of delays is very widely spread, with a high prob- ble to fragmentations of activities, inefficiencies, ability of delays largely exceeding the average.3 and even rent seeking activities and corruption. It means that traders have to support high The trade and transport costs borne by LL- logistics costs in terms of inventory or using DCs now depend more on operations than on expensive mode of transportation such as air infrastructure capacity. The main factor is the cargo. These additional costs may be higher than fragmentation of the supply chain. Few traders pure transportation costs, and may represent in LLDCs have access to the door-to-door lo- more than 10 percent of the value of the goods. gistics infrastructure that has developed in in- dustrialized countries over the past two decades. Figure 2:  The spread of delays of transit containers in the Instead, they rely on an extended sequence of port of Dar es Salam. distinct operations, with many procedures, agencies, and services, all prone to rent-seeking and overregulation. LLDCs face not only mul- 0.07 tiple clearances, but also trans-loading from one Proportion of containers 0.06 vehicle or mode of freight to another (Figure 3). 0.05 The main steps in this extended supply chain in- 0.04 clude (on the import side; the chain is reversed 0.03 0.02 for exports) port handling, initiation of transit, 0.01 loading and multimodal operation, control en 0 route, border procedures, and customs clearance 0 10 20 30 40 50 60 70 80 90 100 110 120 Number of days 3 For a typical distribution of delays 10 percent will exceed 200 percent of the average, and 5 percent will Source: World Bank 2010. exceed 300 percent. 12   Improving Trade and Transport for Landlocked Developing Countries Figure 3: An extended chain of operations Port of Rail Multimodal Road Border Road Final entry transit transfer transit crossing transit clearance Check points International transit National transit Source: Arvis et al. (2010). Note: Transit trade describes the inland movement of goods under customs control that is not cleared by customs. Transit can take place in the country of destination and origin of the goods (national transit) or in a third country where the merchandise is carried from an entry post to an exit post (international transit). Hence, a complete transit is a sequence of international and national transit links. Landlocked countries can trade with non-neighboring countries only through transit systems. at the destination. These activities take place of process. In many environments the complex- mostly in the transit countries. ity of the supply chain means that traders or As noted earlier, under those operating their forwarders need to spend more time and conditions, the average transit time is longer in staff to get things done, and this adds to the large part because of the time it takes to initiate costs. It has been shown that in some cases, like transit trades at the point of origin (such as the Western Africa, these additional costs are on a port) and to less extent because of delays at the par with the cost of trucking. border crossing or controls en route. The main Finally, the organization and market struc- transit delays usually occur at the origin or des- ture of services, particularly trucking, can serve tination in initiating or clearing transit cargo as a significant source of higher transport costs. (typically, it takes about one to three weeks in Existing systems of transportation along trade African transit countries). corridors cause limited productivity, discourage The many steps, the fragmentation of con- competition, and often perpetuate poor-qual- trol, and the low quality of services make the ity services and excess capacity. Protectionist supply chain unpredictable, which shows up legislation and overregulation of freight are in the spread in transit times. The system lacks especially prevalent in Africa. Recent research redundancy: if one link fails, few alternatives (Teravaninthorn and Raballand, 2008) shows are readily available. Other factors that make that costs to the transport provider in Africa the delivery process unpredictable or unreliable were not very different from levels in other coun- from one end of the chain to the other include: tries, but prices charged on certain corridors in breakdowns of key infrastructure, transport the presence of administrated freight allocation equipment, insecurity, and fuel shortages. All were up to 3 times higher (such as in Central these risks give rise to additional inventories, Africa). The basic cause was heavy market reg- emergency shipments, suspended operations, ulation, which had come to be used mainly for and lost markets. protecting existing providers, maintaining rev- Another frequently documented (Arvis enue for unproductive providers (hence higher 2010) source of costs are those attached to the ac- prices), and discouraging competition in service tivities in the supply chains that could be avoid- to the clients. This resulted in a combination of ed. They include facilitating payments, but also both poorer service quality and higher prices, legal fees paid for unnecessary documentation compared to services in other countries. Improving Trade and Transport for Landlocked Developing Countries   13 Making reliable trade and Hard and soft components of the transport connections: the Transit transit system System and its policy framework. The legal framework is essential for the cre- The conventional policy focus to alleviate ation and well-functioning of any transit the access constraint is on the physical infra- system. There are already numerous sources structure and on international transit treaties. of law, at various levels: global, (sub)regional, However, the connection of LLDCs through bilateral. their transit country happens through a transit The global legal instruments set commonly system, which is more than a physical transport accepted principles in areas such as customs (e.g. corridor. A “Transit system” refers to the in- Kyoto convention) and transit (TIR conven- frastructure, legal framework, institutions, and tion). Just by adhering to the principles of these procedures serving trade corridors. It hastwo conventions, LLDCs and their transit countries components: its infrastructure (hard and soft), would meet minimum but efficient standards and the implementation activities to make the in terms of their own procedures, and also in corridor work (Figure 4). terms of how they regulate services. However only the Central Asian LLDCS became parties Figure 4:  The access problem and the transit corridors: a to these conventions and systematically imple- ment them. conceptual framework Regional Economic Communities (RECs) are natural geographical instances that deal with “Soft” and “Hard” Transit System: trade and transport facilitation issues. In fact, as Infrastructure Implementation Mechanisms in the case of the EU, customs, trade and trans- portation provisions are key to the early steps of Implementation Implementation truckers forwarders activity focus regional integration. Countries that are part of a REC would develop a harmonized customs Private code (even in the absence of a fiscal customs sector Customs International union with common revenue), identical or banks TRANSIT REGIME Movement of similar rules applying to logistics companies business & Facilitation GOODS assoc. and international freight within their territory, simplify border crossing, and eventually devel- global bilateral tools treaties op a regionally integrated transit regime (which Legal is more difficult). Among the RECs, which Framework have been instrumental in implementing the agenda are the Eurasian Customs Union, the regional International community Enforcement of SIECA in Central America, and the SACU Movement of TRANSPORT in Southern Africa. In Africa, the UEMOA, Vehicles & transport customs Policies SERVICES COMESA, and SADC have also successfully implemented common provisions, notably to Institutions facilitate cross border movements of trucks, regional but less so in terms of actual customs or transit secretariat rail road integration. Although currently there are more Physical Cross Border than 40 multilateral treaties applicable only to Connectivity CORRIDOR COOPERATION & corridors in West Africa, their implementation Management Information does not seem to be very effective. border ICT SHARING In terms of transit, the bilateral agreements are needed to implement local provisions like common procedures and opening hours of border posts. However, comprehensive bilateral 14   Improving Trade and Transport for Landlocked Developing Countries treaties are not the best solution except in the absence of regional references (such as in South Some key references Asia e.g. India-Nepal, Pakistan-Afghanistan). Over-elaborate bilateral treaties can even be counterproductive by introducing rigidities in The WB knowledge contribution in this field has been quite prominent; implementation, deviating from international the recent knowledge products include toolkits for corridor management best practices, or defending vested interest, as and customs and border management. many bilateral treaties on trucking do (Kunaka, Border Management Modernization Tanase et al. 2013). Toolkit (McLinden 2011) provides Physical infrastructure is the most obvi- policymakers, development profession- ous constraint on corridors. The road and rail als, and reformers with a broad survey infrastructures are essential. They are typically of key developments and principles for achieving trade facilitation improvement available, and in good or acceptable conditions, through the adoption of contemporary for most countries, meaning that the possibility approaches to managing cross border of interruption due to natural events or break- trade. In contrast to the traditional bor- down is very low. Given the efforts provided der management reform agenda, with its by countries and international agencies during focus specifically on improving customs operations and trade related infrastruc- the time of implementation of the Almaty Pro- ture, this book addresses both customs reform and areas well beyond gramme, the challenge has shifted from build- customs—a significant broadening of the traditional scope of reform ef- ing new infrastructure to being able to maintain forts. It provides practical advice on how to develop a strong business them, a question that requires urgent attention case for reform and how to design and implement comprehensive border from the poorest countries, where typically the modernization programmes in developing countries. road fund or equivalent cannot generate enough Trade Corridor Management Toolkit (forthcoming 2013) aims to resources for periodic maintenance for interna- assist policymakers and development professionals in improving trade tional and national infrastructure. and transport corridor performance, and to guide them in identifying It is often argued that trade would be facili- constraints and improvement measures. It provides a consistent ana- tated by investment in dedicated logistics multi- lytical knowledge base or a comprehensive set of guidelines to assist policymakers in: i) defining core indicators of performance of trade cor- modal facilities like dry ports. In principle these ridors; ii) identifying measures that can be taken to improve corridor can help, and they do develop quickly in some performance; and iii) describing the trade facilitation agreement and countries with large volumes of trade by rail, such institutional issues that impact corridors. as Kazakhstan. The business case is less strong for countries with smaller volumes such as in sub-Saharan Africa, where some investments are already underused. International experience sug- The Bank has published a series of toolkits gests that large volumes of containers are needed and references that provide information on re- (50 000 TEU per year), that the facilities should forms and capacity buildings, relevant for both be located close to economic centers of activity, LLDCs and their transit countries. and that they should be developed in PPP with Finally, transit requires a strong and in- qualified international logistics companies. ternationally connected Private sector. Lo- The enhancement of national institu- gistics operators should be able to manage the tions is also a pre-requisite for efficient transit entire supply chains, to track and trace goods trade and transportation. The most important efficiently and reduce the unreliability of the institutions are: supply chains. The lack of integration in in- 1. Customs in the transit country and the ternational logistics networks can be a serious LLDC bottleneck, as is the case for instance in Central 2. Port authority in the transit country Asia. The banking sector role is also important 3. Road agencies in both countries in facilitating international payments, issuing 4. Road Transportation regulators in both customs bonds and guarantees, and insuring countries the vehicles. Improving Trade and Transport for Landlocked Developing Countries   15 Transit systems and their remains largely unavailable for the other implementation mechanisms LLDCs so far. 2. A Common transit within a Regional Transit systems that govern the movement Community, with one single document of goods from origin (or port) to destination andone regional guarantee. The working have serious implementation issues and require model is the European Common Transit more attention. Transit systems are based on (EU and EFTA). Only two regions have the transit regime, which is the set of rules and somehow reproduced it and have an inte- regulations that govern the movement of goods grated transit: Central America and the from their origin in the transit country (often a Eurasian Customs Union. Other regional seaport) to their destination (such as a clearance transit systems are purely nominal and not center in the destination country). The efficien- regionally integrated, in practice because of cy of the corridor supply chain depends on its a lack of implementation or serious design design and above all its implementation. flaws (West Africa or South East Asia, for Customs Transit is the single most prob- instance). lematic area of implementation. The principles Transport policies and protocols govern of working transit procedures are essentially the movement of vehicles across borders in the universal, and procedures involve a transit doc- same way that customs transit regimes govern ument and a guarantee scheme, which together the movement of merchandise. They are im- prevent multiple taxation of the goods in transit, plemented in countries and across borders to also precluding revenue losses associated with regulate logistics services, recover infrastructure leakage of the goods into the transit country. costs, and to improve competition within and Several legal instruments aimed at facilitating between modes of transportation. One of the transit have been developed in the past decades. most interesting protocols is the SADC protocol, Despite these efforts, achieving an effective and which greatly contributed to make the trucking working transit regime has been elusive in all industry regionally integrated and of high ser- regions outside Europe. Common implemen- vice standards in Southern Africa. Conversely as tation issues include weak information systems shown by Kunaka, Tanase et al. (2013) restrictive and poor guarantee management, lengthy tran- bilateral treaties have a negative impact. sit initiation procedures in a country of origin Regional agreements, notably in customs (usually port), lax regulation of entry for the and transport codes, should also set common operators authorized to participate in transit standards for ancillary professions like freight operations, control mentality and extensive forwarder and customs brokers. use of convoys to escort the transit vehicle, and Finally, in many circumstances Corridor misconceptions in transit facilitation initiatives management Initiatives facilitate cooperation (e.g., it is proven that transit does not require a and build trust between transit and landlocked heavy border infrastructure). countries and between public and private par- There are also major gains in integrating ticipants, including the set up of joint corri- the transit regime across countries in the same dor management institutions or the survey of corridor, to avoid duplications and new proce- corridor performance indicators for common dures at each border. As shown in the World solutions. Bank review (Arvis 2011), there are only two To sum up, the main factors behind unre- working principles: liability include procedural complexity, ineffi- 1. A global instrument with a central clearing cient market for services such as trucking, and house to connect national transit between a lack of proper implementation of a transit countries. This is achieved by the TIR sys- system. There is no obvious quick fix; it will tem of the United Nations and implement- require a series of interrelated improvements ed in partnership with the IRU. The TIR of transit processes and creating incentives for is effective in Central Asian LLDCs, but good service. 16   Improving Trade and Transport for Landlocked Developing Countries World Bank Project Portfolio Supporting the Section Aims of APoA 4 T he Bank portfolio of Almaty project has been growing over the decade faster than trans- portation projects, with increased focus on multi-country regional projects. The Bank has also support several technical assistance vehicles that contribute actively to the Programme including the sub-Saharan Africa Transport Program and the Trade Facilitation Facility. Since the fiscal year of 2003 (FY03), the number of projects related to Almaty’s goals is 143, and has increased more or less steadily over the ten-year period. Indeed, starting with 5 projects in 2003, the number has now reached 18 in 2013. The amount invested however, was multiplied almost ten times between 2003 and Figure 5: Almaty lending by value 2009 (from US$326 M to US$3156 M), but 3500 3000 then decreased slightly to US$2089 M in 2013. 2500 Regarding the regions in which investment US$M 2000 is most conducted, this concerns Africa as well 1500 as Europe and (primarily) Central Asia. East 1000 500 Asia and Pacific, closely followed by South Asia 0 are next. Latin America and the Caribbean, and 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Almaty lending by geographical Figure 7:  Source: World Bank. location by value Almaty lending by number of Figure 6:  LCR SAR projects 1% 4% 20 ECA AFR 15 42% 48% 10 5 0 MNA EAP 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0% 6% Source: World Bank. Source: World Bank. Improving Trade and Transport for Landlocked Developing Countries   17 Almaty lending by geographical Figure 8:  Regional Integration Projects location and number of projects Portfolio Out of the Regional Integration and Trade Fa- LCR 1% cilitation projects, over 70 percent include least SAR MNA 7% developed landlocked countries (LLDCs) or 1% transit countries. AFR Between FY08 and FY12 the World Bank 54% has approved a total of USD$ 7,539 million in ECA support of regional economic integration and 27% trade facilitation projects. The total commit- EAP 10% ments per fiscal year can be seen in Figure 10. The majority of regional integration proj- ects are in the Africa (AFR) region (see Figures Source: World Bank. 7 and 8) followed by East Asia Pacific (EAP) and Europe and Central Asia (ECA). In terms of total commitment however, ECA has been Middle East and North Africa, represent a very at the forefront with regards to investments small portion of investments. into regional integration and trade facilitation, Since FY03, the Transport portfolio has representing over 50 percent of IBRD/IDA been increasing gradually, with an average an- commitments between FY08–FY12. nual lending of about US$ 5Billion. A signif- icant spike in lending occurred between FY09 and FY11 due to the global financial crisis, but The Africa Transport Policy as the global economy is progressively recover- Program (SSATP) ing lending has resumed to lower levels of about US$ 4.8 billion. The majority of funds have The Africa Transport Policy Program (SSATP), been allocated to the Rural/Interurban roads established in 1987, is an international part- subsector, making up over half of the portfolio. nership which comprises African countries, This is followed by projects in the Urban Trans- Regional Economic Communities (RECs), port and Railways subsector (See Figure 9). continental institutions such as the African Commitment per Fiscal Year and per Sector Figure 9:  10000 9000 8000 7000 6000 Million US$ 5000 4000 3000 2000 1000 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Railways Gen transport sector Aviation Ports/water/shipping Rural/InterUrban Rds Urban Transport Roads & highways Pub admin-transport Note: Roads and Highways were renamed in FY11, now split between Rural/InterUrban, Urban and General Transport. 18   Improving Trade and Transport for Landlocked Developing Countries Map of Regional Integration and Trade Facilitation Projects FY08–FY12 Map 1:  World Bank Regional Integration and Trade Facilitation Projects FY2008 – FY2012 Kiribati, Tonga and Tuvalu Union Commission (AUC) and United Na- organizations. SSATP is recognized and re- tions Economic Commission for Africa (UN- spected as a key transport policy development ECA), public and private sector organizations, forum in Africa, bringing together decision and international development agencies and makers and stakeholders while also developing networks of specialists—researchers, operators, and consultants—in most land transport related Total Commitment for Figure 10:  fields in Africa. Regional Integration and Trade The Regional Integration and Transport Facilitation Projects (RIT) component of the SSATP Program has focused on strengthening the capacity of the Regional Economic Communities, corri- 3500 dor management authorities, and countries to 3000 address obstacles to trade along the regional 2500 corridors. This was achieved by firstly provid- Million US$ 2000 ing tools to monitor corridor performance and 1500 understand causes of poor performance, and 1000 then secondly, providing the foundation for 500 an inclusive decision-making process to adopt 0 relevant policies. In accordance to that strategy, FY08 FY09 FY10 FY11 FY12 the SSATP has developed its activities along three themes: transport observatories, corridor Total management, and regional coordination. In se- lected cases, activities were further developed as Improving Trade and Transport for Landlocked Developing Countries   19 Figure 11 and Figure 12: Number of and Commitment for Regional Integration and Trade Facilitation Projects Total number of Regional Integration and Total commitment for Regional Integration and Trade Facilitation Projects by region FY08–FY10 Trade Facilitation Projects by region FY08–FY10 SAR MNA SAR MNA 7% 1% 9% 2% AFR LCR AFR LCR 41% 6% 20% 11% EAP ECA EAP ECA 13% 20% 19% 51% Source: World Bank. proof of concept and pilot projects, to promote vided by the private sector), and procedures and adoption and replication. institutional issues (which are primarily rules set by the public sector, to regulate public or private processes). Most of the interventions re- Transport Observatories quired to improve the competitiveness of trade Good transport facilitation policies are policies are relevant to a specific geographic context, on that have a positive impact in the reduction of the backdrop of an international framework trade costs. There are two important assump- for trade facilitation. It is the combination of tions in this, the first being that the problems this geographic focus and the inclusion of all to solve have been correctly identified, and the stakeholders involved in trade and logistics second, equally important, is that a noticeable which is the reason for the success of the cor- progress can be measured. Over the years, ridor approach as an effective and focused way SSATP has developed, and continues to refine to address transport facilitation challenges, for and expand, a comprehensive toolbox of diag- both intra-regional and international trade (in- nosis and monitoring instruments, grouped un- cluding transit). The SSATP Corridor Manage- der the generic term of ‘transport observatories’. ment activities have the objective of supporting The SSATP transport observatory activities the establishment of corridor institutions, pro- have the double objective of enhancing and moting an inclusive policy dialogue among all strengthening the content of the toolbox, whilst categories of stakeholders. also providing technical assistance for its actual implementation and use in the policy dialogue in African corridors. Regional Coordination Trade facilitation and regional integration are complex issues, which involve several institu- Corridor Management tional layers (at national, corridor, and regional Trade and transport facilitation implies inter- levels), several categories of stakeholders, and ventions in three broad areas: trade infrastruc- development partners. Coordination of pro- ture (in which the private sector in increasingly grams and activities is therefore critical. In associated for its funding and operations), trade the wider continental context, coordination and logistics services (which are primarily pro- is also essential to ensure cross-fertilization, 20   Improving Trade and Transport for Landlocked Developing Countries dissemination of good practices, and exchange design, investment, and management of critical of experience across corridors and Regional trade-supporting infrastructure). Economic Communities. The Regional Eco- The TFF has supported since its inception nomic Communities Transport Coordination around 60 activities grouped into three clus- Committee (REC TCC) facilitated by the ters. Cluster one activities focus on improving Sub-Saharan Africa Transport Policy Program data collection and sharing of trade facilitation (SSATP) is the forum that provides the Africa information between stakeholders, and more regional integration and trade facilitation com- specifically in two broad areas: (1) collection of munity the opportunity to review progress on operational trade facilitation data, including es- their respective programs, exchange experience tablishment of measurement mechanisms, and and coordinate their activities. (2) best practice information-sharing amongst the various stakeholders. Activities in Cluster two activities include The Trade Facilitation Facility scoping, feasibility studies, and pilot inter- ventions. These activities reflect the fact that The World Bank Group, in collaboration with although the trade facilitation issues at hand four donors (Canadian Agency for Internation- may be well known, the trade facilitation issues al Development (CIDA), the Swedish Agency may not have been adequately developed or for International Development (SIDA), the well-defined for implementation or for a roll- UK Department of Foreign and International out of a full-fledged trade facilitation project. Development (DFID), and the Ministry of These activities also include consensus-building Foreign Affairs of the Netherlands) is provid- among stakeholders (prior to designing a trade ing US$55 million support to reduce the cost facilitation implementation project such as the of trading across borders, through a multi-do- design of single windows), implementation of nor trust fund (the Trade Facilitation Facility new transit regime, or implementation of a (TFF)) that provides opportunities for coun- multi-modal transport corridor project. Since tries to implement the Almaty Plan of Action. its inception, twenty one cluster-two activities The TFF seeks to enhance LLDCs’ com- have been funded, nineteen in SSA, and one petitiveness by strengthening the quality of each in East and Central Asia. Most these trade facilitation systems and reducing trade activities are regional economic Communi- costs through, among others: ties such as CEMAC, ECOWAS, UEMOA, 1. Assistance to the implementation of prac- COMESA, or EAC. tical initiatives in key areas such as border Cluster three activities focus primarily on management improvement, institutional implementation. Activities in this cluster are development, trade procedures, logistics ser- outcome-oriented activities that seek to impact vices markets, and gateway infrastructure. a particular area of trade facilitation. Activities 2. Support trade corridors and other regional in this cluster have relatively long duration, facilitation initiatives. and all the activities in this cluster are ongoing. The TFF assistance is delivered through Typically activities in this cluster include soft technical advisory services and capacity-build- infrastructure components and come broadly ing e.g. (long-term technical advisors to sup- grouped under the following themes: port the implementation of regulatory and 1. Improved border management institutions policy reforms related to trade and transport processes, and related hardware; Data facilitation; short-term advisory services in the shows that improving border management design and improvement of regional trade fa- and land border-crossing procedures can cilitation and transit regimes; technical support directly impact on the most vulnerable for the improvement of border management, groups (such as female traders). Simi- clearance, technical controls, and standards sys- larly, improving market conditions can tems; and capacity building to promote better improve the livelihoods of informal small Improving Trade and Transport for Landlocked Developing Countries   21 and medium-scale traders in low-income 2. Increased efficiency and capacity of trade countries (women often represent a big gateways. proportion of this group). 3. Streamlined regulations and harmoniza- tion of procedures. 22   Improving Trade and Transport for Landlocked Developing Countries Examples of Projects and Section Initiatives 5 W orld Bank projects contributing to directions indicate significant potential for trade the APoA include many corridor and with Europe, China, and South Asia in addition regional integration projects. These to current trade with Russia. This perceived trade projects increasingly combine the hard (infrastruc- potential is the main reason for the establish- ture) and the soft (technical assistance to reforms) ment of the six CAREC corridors. While rail components in the same project package, as the transport accounts for more than 75 percent of experience shows that this comprehensive approach the combined ton-km of freight carried in Ka- has the most impact on the ground. zakhstan, past trends show a ten percent increase in road freight per annum since 2002. Roads are a key element of the Kazakhstan South-west roads – Western transport system, playing an important role in Europe–Western China the provision of basic access to rural areas, and International Transit Corridor providing essential transit corridors for trade. The key issues facing the management of the The geography, population, economy, and trade Republican road network are: a) outdated or- flows of Central Asia have an important bear- ganizational structure and weak institutional ing on transportation challenges in Kazakhstan. capacity to plan and manage the road network, Within the region, distances are substantial mainly because the Committee has few trained (2,000 km from the Kyrgyz Republic to Rus- personnel; b) inefficient allocation of funds; sia) and access to major markets involves very c) poor condition of the network, with over long travel distances. There are also significant 50 percent of roads requiring major mainte- non-physical barriers to trade, including ineffi- nance or full rehabilitation; d) inappropriate ciencies at border crossings, unofficial payments, maintenance practices that are reactive rather and the lack of harmonization of basic transit than preventive (i.e., repairs are done once de- documents and regulations, all of which have fects appear), resulting in higher costs; e) poor been subjects of discussion at the Central Asia quality of construction; f ) very poor road safety Regional Economic Cooperation (CAREC). record, with indications that this will increase; For the region, trade with Russia continues g) unsatisfactory condition of local road net- to be important mainly due to historical rea- works, thereby limiting access for rural com- sons, with much of this trade transiting through munities to essential social services and work Kazakhstan due to the availability of transport opportunities; h) lack of services to transporters infrastructure. China is growing in importance along the transit corridors; and i) non-physical as a trading partner for Central Asia, with Ka- barriers in the form of unofficial payments and zakhstan taking the largest share. Other signif- unscheduled inspections for transit traffic. icant trading partners of the CAREC countries The overall objective of the government’s include Japan, Korea, Turkey, and increasingly, WE-WC Corridor development program is the EU countries. to improve transport efficiency and safety, and The CAREC countries have designated promote development along one of Kazakh- six major transport corridors, four of which stan’s main strategic road transport corridors. transit through Kazakhstan. Although current Transport and trade efficiency will be improved trade movements are relatively low, the trade through provision of better infrastructure and Improving Trade and Transport for Landlocked Developing Countries   23 services along the entire corridor to reduce cities in Africa (Lagos, Accra and Abidjan), and transport costs, and through gradual reform of serves a population catchment area of over 35 the entities responsible for all categories of roads. million people. This corridor fulfills two main functions in West Africa: a) It links the main cities and neighboring countries (e.g. Lagos in Corridor Projects in West Africa Nigeria to Cotonou in Benin). Regional traffic is predominantly based on traffic of passengers The transport sector in West Africa plays a key who conduct significant informal border trade. role in the economic development of the sub-re- More specifically, at least two thirds of the total gion, and generates about six percent of its GDP. traffic has an origin/destination from/to the Cognizant of the fact that an efficient regional neighboring country. Traffic in transit from road network is an enabling infrastructure re- Abidjan to Lagos is limited to less than five quired to promote trade and socio-economic trucks a day (ALCO report 2006). However, development in general, ECOWAS and WAE- almost one passenger out of two, along the cor- MU member states have consistently commit- ridor, crosses the border at least once a week, ted themselves to the financing of designated and most of them trade on the other side of regional road corridors. In many cases, bilateral the border. b) It is the global gateway to coastal arrangements have been made by member states and landlocked countries in West Africa, with to finance inter-state road improvement works. all landlocked countries using at least one port In a number of cases these bilateral arrange- along the Abidjan-Lagos corridor. Traders in ments involve a combination of two or more West Africa sometimes shift port of exit/entry, member states to jointly finance cross-border and segments of the corridor are used when a interstate roads. Despite these commitments, problem arises on a given route: for example, the surface transport system in West Africa is part of the Abidjan-Accra road was extensively still largely based on increasingly obsolete co- used, during the crisis in the Ivory Coast, for lonial era transport infrastructure, which was goods shipped to Burkina Faso. developed with the objective of facilitating the The overarching development objective of extraction of raw materials out and imports into the project is to facilitate movement of goods the sub-region, following a south-north axis and people, and increase port competition along from the major sea-ports to the hinterland. the coastal corridor, by reducing physical and In addition to the physical obstacles gener- non-physical barriers along the Abidjan–Lagos ated by the poor condition of road infrastructure, corridor. regional trade in West Africa is characterized by numerous obstacles to the free movement of goods and passengers such as: (i) illegal check- Taking a Multi-Pronged Approach points; (ii) long, costly, and non-harmonized to Project Design: The Example customs procedures; (iii) lack of or insufficient of the Nepal-India Regional Trade automated customs procedures and adequate and Transport Project equipment at border posts; and (iv) smuggling and corruption largely generated by restrictive Over the past decade, the World Bank added trade policies. Furthermore, along the corridor to its already significant portfolio of trade and there is limited modal competition due to the transport facilitation projects with a focus on fact that there is not a coastal railway system landlocked developing countries. Recent proj- and coastal shipping is very limited. The effect ects have become progressively more complex of these physical and non-physical barriers leads reflecting the multisectoral nature of the issues to delays in the movement of goods and services, that have to be dealt with, which encompass hindering intra and inter-regional trade. technical issues concerning infrastructure, pol- The 1028 km coastal corridor links some icies and regulations governing transport and of the largest and economically most dynamic logistics services provision, and cooperation and 24   Improving Trade and Transport for Landlocked Developing Countries collaboration between countries and agencies seeks to decrease the time and cost of moving that handle these aspects. One example of a goods between Nepal and its main seaport project that takes a comprehensive approach is gateway in India. The project has three main the Nepal-India Regional Trade and Transport components: the first seeks to improve select- Project. ed trade-related infrastructure, mainly though Nepal is a landlocked country in South improving a section of the road in Nepal that Asia, and is among the landlocked countries handles more than two thirds of the country’s with high trade costs. Over the past decade and international goods trade flow, the construction a half in particular, Nepal has invested in several of a new ICD in Kathmandu, and the improve- initiatives to reduce these costs, especially along ment of two existing ICDs. The second com- the main corridor linking it to the Kolkata/ ponent focuses on modernizing transport and Haldia port complex in India. In the late 1990s, transit arrangements between Nepal and India. with support from the World Bank, among The component has three main activities: i) in- other improvements Nepal constructed three troducing a modern and effective transit regime, Inland Container Depots at the major border including technical assistance in enhancing the crossing points with India. One of the three capacity to negotiate trade and transit treaties; ICDs has a rail connection to Kolkata, and has ii) simplifying and harmonizing customs and since emerged as the largest transloading node border management procedures, processes and for Nepal’s international trade. Trade traffic systems, especially to provide for electronic coming or going through Indian ports is moved interchange of transit data between Nepal and by rail between the port and the ICD, where it India; and iii) strengthening and modernizing is then transferred between road and rail trans- the regulation of national and international port. Shippers prefer the railway because it is trucking services. The third component seeks to cheaper than road transport, while Indian au- strengthen trade-related institutional capacity thorities prefer it as they can implement a more in Nepal, mainly through to introduction of secure transit regime than is the case with road a trade portal and electronic national single transport. However, while the railway now han- window. The latter will allow traders to submit dles more than 60 percent of Nepal’s contain- and have processed all required import, export, erized third-country trade traffic, operations and transit documentation electronically via a are hampered by the requirement to run block single gateway, instead of submitting essentially trains carrying only Nepalese traffic, which due the same information numerous times to dif- to limited cargo volumes increase headway be- ferent government entities, as is the case at the tween trains and cargo dwell time in the port. moment. At the same time, road transport, which is the The design of the project builds on available alternative mode, offers poor quality services evidence gathered by the World Bank that sug- with high costs, partly due to informal cartels gests that reducing trade and transport costs for active in the market. As a result, trade flows and landlocked countries requires a multi-pronged transit times for Nepal are characterized by a approach. In fact, the analysis of the likely im- high degree of uncertainty, which increases lo- pacts of the project clearly points to most of the gistics costs. benefits flowing from the non-infrastructure In an effort to address the continuing chal- elements. Yet, these can only be unlocked if lenges, the government of Nepal has worked the core infrastructure is strengthened. There with the World Bank Group to prepare a new are, as such, synergies between the components comprehensive project to improve trade facili- that are fundamental to the project meeting its tation especially along its main trade corridor. objectives. Total financing is US$ 101 million, a third in A short video describing the project can be grants, which fund the soft trade facilitation seen at: http://www.worldbank.org/en/news/ components, and the remainder in credits fund- video/2013/02/15/video-improving-trade-in- ing the trade-related infrastructure. The project nepal-is-a-long-road Improving Trade and Transport for Landlocked Developing Countries   25 Proposed Central Asia Road Links people and businesses to local and global ser- (CARs) Program vices and markets across borders. The objective of the proposed Program is Initiated by governments in respective Central to increase cross-border connectivity and en- Asian countries, the proposed Central Asia hance regional economic development, which Road Links (CARs) Program is currently being can be achieved by rehabilitating priority road considered for financing by the World Bank. links and improving transport operations and Realizing the necessity for collective action, the maintenance practices. Financing activities pro- proposed CARs Program will address some of posed under this Program are expected to have the development challenges which have come substantial positive regional spill-over effects about with the recent ‘disruptive’ breakup of the and promote positive change in the region. In Former Soviet Union, the emergence of new line with the overall objective of the Program, markets, and the growing disparities between sequential entry of countries is proposed, ini- capital cities and peripheral regions. At the tially starting with the Kyrgyz Republic and core of these challenges is the need to re-build Tajikistan. The financing requirements for this a framework across national borders, including transformational Program are estimated to be a regionally and locally integrated trans-border at least US$ 400 million. road transport network capable of connecting 26   Improving Trade and Transport for Landlocked Developing Countries What is next? T remendous progress has been achieved 3. Promotion of economically sound mul- since the adoption of the Almaty Pro- timodal transportation with private gramme of Action in most of the coun- participation. tries concerned by the Programme, but many of 4. Rehabilitation and reconstruction of the the original aims remain valid. transport infrastructure, particularly in The World Bank Group has recently en- countries or regions emerging from war, hanced emphasis on two major ambitious but internal conflict, and natural disasters. achievable goals: 5. The development of dry port and logistics 1. To end extreme poverty at the global level centers projects in landlocked and transit within a generation. developing countries. 2. To promote what may be called “shared 6. Projects to promote Customs Reform prosperity”: a sustainable increase in the and improve the control infrastructure on well-being of the poorer segments of corridors. society. 7. Joint projects in trade and production to These two goals and their respective indi- help bolster sub-regional and regional cators can be summarized as: trade. 1. End extreme poverty: the percentage of The following areas should continue to be people living with less than US$1.25 a day considered a priority for technical assistance: to fall to no more than three percent glob- 1. Facilitating environments that allow for the ally by 2030. implementation of multi-country customs 2. Promote shared prosperity: foster income transit regimes, either through the imple- growth of the bottom 40 percent of the ment of international transit agreement or population in every country. design and implementation of functional These goals must be achieved in an envi- regional agreements. ronmentally, socially, and fiscally sustainable 2. Improving the performance, affordability, manner. A sustainable path of development and inclusiveness of transport services. and poverty reduction would be one that: (i) 3. Enhancing the capacity to diversify exports. manages the resources of our planet for future 4. Improving the information on market generations, (ii) ensures social inclusion, and opportunities. (iii) adopts fiscally responsible policies that lim- 5. Initiating trade facilitation projects, aiming it future debt burden. at simplifying, streamlining, and standard- Transport and trade are major enablers of izing import, export, and customs pro- inclusive, sustainable growth; therefore the fol- cedures, and related capacity building of lowing areas should continue to be considered a particular human resources. priority for financial assistance: 6. Assisting governments in elaborating the 1. Investments designed to complete “missing implications of acceding to relevant inter- links” in the transit transport chain, to ex- national conventions. tend transport infrastructure networks to 7. Reinforcing skills and capacities, design- landlocked developing countries. ing and implementing training programs 2. Maintenance of existing physical transit for private and public agents, inter alia, in transport infrastructure. the areas of customs, infrastructure and Improving Trade and Transport for Landlocked Developing Countries   27 equipment maintenance, road safety, and 8. Expanding availability of indicators and trucking operations. regional databases on road transport. 28   Improving Trade and Transport for Landlocked Developing Countries References Arvis, J.F. et al. Connecting to Compete: Trade A World Bank Study, World Bank, Wash- Logistics in the Global Economy. The Logis- ington DC. 2011 tics Performance Index and Its Indicators. Kunaka, C. et al. Quantitative Analysis of Road World Bank, Washington DC, 2007, 2010, Transport Agreement. World Bank. Wash- 2012 ington DC, 2013 Arvis, J.F., Raballand, G. and Marteau, J. The MacKellar, L., Wörgötter, A. and Wörz, J. Eco- cost of being landlocked: logistics costs and sup- nomic Development Problems of Landlocked ply chain reliability. Direction in Develop- Countries. IHS Transition Economic Se- ment. World Bank. Washington DC, 2010 ries No. 14. Vienna: Institut für Höhere Arvis, J.F., Carruthers, R., Smith, G. and Wil- Studien, 2000 loughby, C. Connecting Landlocked Devel- McLinden, G. et al. Border Management Mod- oping Countries to Markets: Trade Corridors ernization. World Bank, Washington DC, in the 21st century. Direction in Develop- 2011 ment. World Bank. Washington DC, 2011 Raballand, G. and Teravaninthorn, S. Transport Arvis, J.F., Duval, Y., Shepherd, B. and Uto- price and cost in Africa. Direction in Devel- ktham, C. Trade Costs in the Developing opment. The World Bank, 2008 World: 1995–2010. Policy Research Paper Sachs, J., Faye, M., McArthur, J. and Snow, T. 6309. World Bank, Washington DC, 2013 The Challenges Facing Landlocked Develop- Collier, P. Africa’s Economic Growth: Opportuni- ing Countries, Journal of Human Develop- ties and Constraints. African Development ment, Vol. 5, 2004 Review Vol. 19 No. 1. Tunis: African De- velopment Bank, 2007 Limao, N. and Venables, A.J. Infrastructure, Geographical Disadvantage, Transport Costs Webography and Trade. World Bank Economic Review 15: 451–479, 2001 www.worldbank.org/trade Kunaka, C. Logistics in Lagging Regions: Over- www.worldbank.org/transportation coming Local Barriers to Global Connectivity. Improving Trade and Transport for Landlocked Developing Countries   29 Annexes Improving Trade and Transport for Landlocked Developing Countries   31 Annex 1  List of LLDCs and Transit countries Country name Transit countries Subregion Afghanistan Pakistan, Iran South Asia Armenia Georgia, Iran Caucasus Azerbaijan Georgia, Turkey, Russia, Iran, Caucasus Bhutan India South-Asia Bolivia Chile, Argentina, Brazil, Peru Latin America Botswana South Africa, Namibia Southern Africa Burkina Faso Côte d’Ivoire, Togo, Ghana Western Africa Burundi Kenya, Tanzania, Uganda, Rwanda East Africa Central African Rep. Cameroon Central Africa Chad Cameroon Central Africa Ethiopia Djibouti East Africa Kazakhstan Russia, China Central Asia Kyrgyz Rep. Russia, Kazakhstan, China Central Asia Lao PDR Thailand, Vietnam East Asia Lesotho South-Africa Southern Africa Malawi South-Africa, Mozambique, Tanzania Southern-Africa Mali Côte d’Ivoire, Togo, Ghana, Senegal Western Africa Moldova Europe, Ukraine Europe Mongolia China, Russia East Asia Nepal India South Asia Niger Togo, Benin Western Africa Paraguay Argentina, Brazil Latin America Rwanda Kenya, Tanzania, Uganda East Africa Swaziland South-Africa, Mozambique Southern-Africa Tajikistan Russia, Europe, Kazakhstan, Uzbekistan, China, Central Asia Afghanistan, Iran Turkmenistan Russia, Euroep, Kazakhstan, Uzbekistan, Central Asia Uganda Kenya East Africa Uzbekistan Russia, Kazakhstan Europe Central Asia Zambia South-Africa, Mozambique, Tanzania Southern Africa Zimbabwe South-Africa, Mozambique, Southern Africa 32   Improving Trade and Transport for Landlocked Developing Countries Logistics performance of landlocked developing countries Annex 2  (1–5 scale) 2007 2010 2012 Country Score Rank Score Rank Score Rank Afghanistan 1.21 150 2.24 143 2.25 149 Armenia 2.14 131 2.52 111 2.57 106 Azerbaijan 2.29 111 2.64 89 2.50 119 Bhutan 2.38 128 2.53 114 Bolivia 2.31 107 2.51 112 2.62 96 Botswana 2.32 134 2.85 70 Burkina Faso 2.24 121 2.23 145 2.33 141 Burundi 2.29 113 1.61 165 Buthan 2.16 128 Central African Republic 2.58 105 Chad 1.98 142 2.49 115 2.04 160 Ethiopia 2.33 104 2.41 123 2.24 150 Kazakhstan 2.12 133 2.83 62 2.70 92 Kyrgyz Republic 2.35 103 2.62 91 2.35 139 Laos, PDR 2.25 117 2.46 118 2.50 116 Lesotho 2.30 108 2.24 151 Macedonia 2.43 90 2.77 73 2.57 108 Malawi 2.42 91 2.81 75 Mali 2.29 109 2.27 139 2.60 100 Moldova 2.31 106 2.57 104 2.33 142 Mongolia 2.08 136 2.25 141 2.26 147 Nepal 2.14 130 2.20 147 2.04 162 Niger 1.97 143 2.54 106 2.70 91 Paraguay 2.57 71 2.75 76 2.49 122 Rwanda 1.77 148 2.04 151 2.37 137 Tajikistan 1.93 146 2.35 131 2.29 144 Turkmenistan 2.49 114 2.92 62 Uganda 2.49 83 2.82 66 2.38 135 Uzbekistan 2.16 129 2.79 68 2.66 94 Zambia 2.37 100 2.28 138 2.89 65 Zimbabwe 2.29 114 2.56 110 Region East Asia & Pacific 2.58 2.73 2.78 Europe & Central Asia 2.50 2.74 2.77 Latin America & Caribbean 2.57 2.74 2.68 (continued on next page) Improving Trade and Transport for Landlocked Developing Countries   33 Logistics performance of landlocked developing countries Annex 2  (1–5 scale) (continued) 2007 2010 2012 Country Score Rank Score Rank Score Rank Middle East & North Africa 2.37 2.60 2.59 South Asia 2.30 2.49 2.53 Sub-Saharan Africa 2.35 2.42 2.47 Income group High income: OECD 3.73 3.73 3.68 High income: nonOECD 3.25 3.24 3.24 Upper middle income 2.66 2.80 2.83 Lower middle income 2.47 2.59 2.61 Low income 2.26 2.43 2.43 Source World Bank. 34   Improving Trade and Transport for Landlocked Developing Countries THE WORLD BANK 1818 H Street, N.W. Washington, DC 20433