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trade facilitation

More Than the Sum of Its Parts: Why Logistics Matter for Your Kindle

Ben Shepherd's picture

Electronics Factory. Source: http://www.flickr.com/photos/poorlenz/22590873/sizes/m/in/photostream/Picture a global supply chain. The one that puts together the Amazon Kindle, for example: The flex circuit conductors are made in China, the wireless card is made in South Korea, and the tablet is assembled in Taiwan. The system works because each location specializes in something, whether it is relatively cheap labor, a cluster of machinery, or technical skills. But unlike a product made in a single factory, the Kindle’s components must cross borders.

The ease of crossing those borders – including through seaports or airports – is crucial to the production network. And, as it happens, fluidity is more important to trade in components than trade in final products. This makes sense, logically – it is easy to see how a whole holiday season’s worth of Kindles could be held up if the flex circuit conductors or wireless cards don’t get to Taiwan on time.

Why Is Trade More Costly For Poor Countries? A New Database Gives Us Some Answers

Jean-François Arvis's picture

Airplanes on a runway. Source: World Bank.It is far more expensive for Tunisia to trade manufactured goods with its next-door neighbor, Algeria, than to trade them with distant France. Similarly, the cost of trading agricultural goods between neighbors Algeria and Morocco is more than twice as high as it is between Algeria and Spain. What hinders countries that are so close to each other – and that share common languages and elements of culture – from exchanging goods?

This is one of the questions we sought to answer in developing a new trade costs database, which is a joint project between the World Bank and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP). In constructing the database, we were initially motivated by a need to provide understandable estimates of trade costs to clients in North Africa. But the database has broader reach: being able to measure and explain the intensity of trade is of practical importance for many countries and for many aspects of our work at the Bank.

Shifting Focus in Trade Agreements – From Market Access to Value-Chain Barriers

Bernard Hoekman's picture

Chain. Source: http://www.flickr.com/photos/pratanti/5359581911/Value chains are an ever more prominent feature of global commerce, with goods being processed – and value being added – in multiple countries that are part of the chain. No longer is trade as simple as manufacturing in one country and selling in another. Rather, goods often cross many borders, undergoing processing and accruing components in diverse settings before ending up in a retail store. A new database developed by the OECD and WTO provides greater clarity into value-added trade trends. Looking at the world through a “value-added” lens challenges our conventional thinking about trade policy, and in particular, the focus of where policy makers should be spending their efforts. This new perspective makes clear that to truly benefit from the dynamism of value chains, governments will need to cooperate in new ways -- with each other and with members of the private sector.

Re-thinking Trade Policy Priorities in a Supply-Chain-Driven World

Bernard Hoekman's picture

Supply trucks in Lao. Source: World Bank.A company importing desktop computers into Russia expects border processing times of up to six weeks. Chinese customs authorities take so long inspecting drug shipments that a global healthcare company must hold nine days’ worth of inventory. Concerned about the prevalence of theft, a cell phone manufacturer must provide a security detail for overland shipments in Mexico.

These are examples of the supply chain barriers that, as a whole, are more detrimental to world trade than tariffs, according to a new report, Enabling Trade: Valuing Growth Opportunities, released today at the World Economic Forum in Davos. The study, a collaborative effort between Bain & Co., the World Bank and the World Economic Forum, concludes that a concerted effort to reduce supply chain barriers to levels observed in the best performing countries could increase global GDP by some 4.7 percent – six times more than what could be achieved from eradicating all remaining import tariffs.

After the Holidays, a Time to Reflect on the State of Food in Africa

Ian Gillson's picture

As we gather in kitchens and dining rooms during this two-month stretch of eating and charity, let us pause for a moment to review the state of food trade in Africa: how fares cross-border commerce in key crops on a continent with pockets of harsh weather and unpredictable politics? How goes the traffic in grains and tubers?

It’s clear that prices are high, following the February 2011 peak worldwide. The price of maize in Nairobi has tripled this year alone, while the price of a 50 kg bag of rice in Dakar has risen from $36 to $43.50. These spikes can be blamed partly on increased demand for food crops – including for biofuel production in Europe and the US. They are also due to supply-side factors, such higher energy prices which impact transportation and fertilizer costs, and weak harvests in large exporting countries.

Reliable Supply Chains: An Answer to Competitiveness and Growth Challenges

Monica Alina Mustra's picture

In today’s interconnected world economy, efficient, reliable and cost-effective supply chains have become necessities in global trade. Trading in a timely manner with minimal transaction costs allows a country to expand to overseas markets and improve its overall economic competitiveness. For many countries, however, identifying bottlenecks along a supply chain and then determining which logistics procedures and infrastructure to upgrade can be a challenging feat.

March Madness or Spring Awakening?

John Wilson's picture

APEC and New Beginnings in Trade

The first Senior Officials’ Meeting (SOM I) of Asia-Pacific Economics Cooperation (APEC) concluded earlier this month in Washington D.C. The APEC 2011 agenda now swings into full action. The member economies in the region are looking for ways to reaffirm APEC’s reputation for innovative economic integration initiatives – and the means by which to stave off new hiccups in the region’s economic recovery.  In particular, the new APEC Supply Chain Connectivity Initiative (SCI) holds real promise as a dynamic successor to APEC’s successful Trade Facilitation Action Plans, which resulted in significant trade cost reductions across the region. 
 

As a testament to the dynamism and ambition behind the trade-related policy goals of APEC – the United States, as APEC 2011 Chair, and the World Bank are working with APEC to build a platform to expand trade through research, data, and capacity building – with direct participation of private sector firms. Fedex is with us in this new venture. Is this March madness – yet another attempt to forge alliances where goals are shared but sustaining momentum proves tough?  Or is it a spring awakening that data, research, and direct partnerships with firms to build in this area provides the real anchor for taking action to assist developing countries tackle trade costs at their source?  I suggest it is the latter.


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