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Going beyond goods: Measuring services for export competiveness

Claire H. Hollweg's picture

The simplest way to think about international trade is the transfer of goods – cars, clothing, bananas. Countries that export more goods are generally better off, because they’re earning money, which allows them to import and build their economies in the process. But services are also vital to exports. In fact, services play a dual role in building an economy’s export competitiveness.

For one, services matter for manufacturing and agriculture exports. Take tee-shirts for example. Sure, they’re made of cotton, but they’re also the result of many service industries. This can include transporting cloth to the factory, tee-shirt design, testing to ensure quality standards are met, and branding and marketing for sale on international markets. All are part of the tee-shirt exporting process. [1]

The second role services play in export competitiveness involves diversification. With cost reductions and technological progress, services have become more tradeable. Exporting services provides an opportunity for export diversification and growth, which is important for economic stability. If global demand for one sector drops, a country with diversified exports can rely on others such as banking, transport, or business services.

Many governments are interested in how services support their country’s exports and economy at large. For example, how much value added do services exports, such as transport or communications, generate in a country? And how much of that is generated directly versus indirectly as inputs like transportation in our tee-shirt example? What types of services inputs, and is that different from comparator countries?

Answers to such questions are typically left unanswered because systematic data is not readily available on how services contribute to exports across developing countries and sectors.

The Export of Value Added (EVA) Database was developed to fulfill this need. The database was recently launched on the World Bank Group’s World Integrated Trade Solutions (WITS) data website. It includes data for user-specific queries and also has data for bulk download.

The EVA Database measures the domestic value added contained in exports for about 120 economies across 27 sectors, including nine commercial services sectors, three primary sectors, and 14 manufacturing sectors. The data spans intermittent years between 1997 and 2011.

What sets the EVA Database apart is the wide coverage of developing countries: over 70 of the economies included are low- and middle-income.

Picture Trade: To Understand GVCs, Connect the Dots

Gianluca Santoni's picture
The increasing salience of global value chains and their analysis has created tremendous demand for “mapping” these chains. How can we quantify the ‘value’ along a chain? How can we visualize the connections between each link?

These are questions we’ve been seeking to answer at the World Bank Group. And we’ve developed a new visualization tool, accessible through our World Integrated Trade Solution database, which allows the public to explore the quantifiable reality of GVCs.

To give you an example of how it works, let’s look at the automotive sector—a very prominent and commonly discussed GVC.

Sturgeon and Memedovic developed a methodology to break down the automotive production chain into final goods—those purchased by the consumer—and intermediate goods—those purchased by other manufacturers as inputs to be used in their own production. They identify three main GVC ‘nodes’: Automotive components (made by suppliers); engines, transmissions, and body assemblies (made by automakers); and finished motor vehicles. Table 1 shows the main exporting country within each of these nodes and its relative market share within that node.
 
Table 1: Main exporter by automotive GVC node, 2014
Main exporter by automotive GVC node, 2014

Table 2 goes one step further. By digging into the trade data, we can identify the most important products for each GVC node, in terms of their relative weight on world trade. This also helps us, in part, to identify which products or activities along the production chain are most significant or add the most value.
 
Table 2: Most traded product by automotive GVC node, 2014
Most traded product by automotive GVC node, 2014

Perhaps not surprisingly, the most exchanged automotive input ‘made by suppliers’ in 2014 falls under the classification HS870899—‘parts and accessories.’ Now, to better understand exactly how these parts and accessories move along the GVC, we can use our Global Trade Network tool on WITS to map all of the bilateral trade flows for HS870899. [1]
 
Figure 1: Global Trade Network visualization for HS870899 - Supplier perspective, 2014
Global Trade Network visualization for HS870899 - Supplier perspective, 2014

Picture Trade: Types of tariffs explained

Siddhesh Kaushik's picture

Let’s start with the basics. What is a trade tariff? It’s a customs duty, or tax, on imported merchandise. For example, if a store owner is importing shoes, a tariff collected by her government might add to the price she has to pay for them. There has been a global effort to reduce tariffs around the world because they make goods more expensive for firms and consumers alike. Lowering tariffs was a major objective of the Uruguay round of negotiations at the World Trade Organization. But in certain circumstances, some governments consider tariffs helpful as a policy tool – they raise revenues and protect local industry from foreign competition (in the shoe example, a locally produced shoe might be cheaper than the imported one with a tariff).

While we’ve used a simple example, tariffs can be quite complex. There are three main types of tariff and they can be queried in UNCTAD TRAINS available through World Integrated Trade Solution (WITS). The three types of tariff are Most Favored Nation (MFN), Preferential and Bound Tariff.  

Picture Trade: How we can visualize intra-regional trade in South Asia and beyond

Siddhesh Kaushik's picture
Intra-regional trade constitutes less than 5 percent of total trade in South Asia, according to World Bank analysis. Economic cooperation remains low, despite the Agreement on a South Asian Free Trade Area (SAFTA). The region’s low level of intra-regional trade is a puzzling phenomenon, and it’s left many interested folks asking questions.

Which regions trade more amongst themselves? What are the top products being exported or imported? Who are the top exporting and importing countries in a particular region?

Here is a visual representation of regional trade in South Asia in WITS that can help quickly unpack some of these questions as they relate to the region. 
 
South Asia, Export by Region
(Click on + sign on left to view country breakdown)


After the jump, we break down these numbers and show how you can explore the viz. 

Picture Trade: How to be a wiz at WITS trade data visualizations

Siddhesh Kaushik's picture

Ever needed to know exactly how much a country exports or imports of a product? How about which trade partners are most important to a country? Or how those relationships and patterns of trade have changed over time?
 
There is now an easy way to get this picture using the WITS Country Analysis Trade Data Visualization tool. Here's how it works. In the visualization below, select a country, a year, whether you want trade flow data for imports or exports, and whether you want to view the data by partner country or by product.

Below these options is a slider, which shows the number of partners/products in the data set. You can adjust this slider to focus on any range of numbers. Say, for example, you are interested in only the top 10 partners, then you can set the slider from 1-10 to view only the top 10-- or slide it in the other direction to see the smallest trade partners. Happy exploring, and post your comments if you find something interesting!

 

WITS Country Analysis Trade Data Visualization


You can explore this and more advanced visualizations in the WITS Trade Visualizations page. To see how these visualizations can help tell stories in more interesting ways, check out our recent blog on fuel prices that uses the Product Analysis visualization.

WITS Trade Data Site: Five New Features

Siddhesh Kaushik's picture

Where can you find the top trading partners for your country? Where can you find the top products exported to and imported from Indonesia? Where can you find just about any type of trade data?

The answers to these questions (and more) are available at our recently revamped World Integrated Trade Solution (WITS) site: wits.worldbank.org.  In previous versions of the site, users needed to login and query the data themselves. You still can.  And many still do to conduct much more detailed and sophisticated research and analysis on trade. But if you want to quickly look up or browse trade statistics like total exports, tariffs applied, top export, and import partners, the data has been pre-calculated and made available as Open Data.

“Thanks to the data I found on WITS, I successfully completed my PhD.  Really easy-to-use site and great upgrades.”
                              – User in India
We have tried to make the new site more intuitive and accessible to the site’s users.  Our team – the Development Data Group (DECDG), the Poverty Reduction and Economic Management Network (PREM), and other World Bank units – worked in consultation with partners, including the United Nations Conference on Trade and Development (UNCTAD), the United Nations Statistics Division (UNSD) and others, to produce this site.  We hope you find the new site as useful as we do.

New Online Tool for Calculating Trade Indicators

Jose Daniel Reyes's picture

Library at Mohammed V University at Agdal, Rabat. Source - The World Bank.Access to reliable, accurate, and up-to-date data is crucial to the analysis work we do here at the World Bank. Making sure we have that data and making it as accessible as possible to others is equally as crucial. That's why we have developed a feature on the World Integrated Trade Solution (WITS) platform that aggregates and analyzes trade outcomes.

For those who don’t yet use it, WITS is an online database aggregator where you can access major international merchandise trade, tariffs, and non-tariff data compilations with a click of the mouse. It’s free software that anyone—World Bank Group staff, policymakers, practitioners, researchers, academics—can use when working on trade and competitiveness issues around the world.

Our team here in the International Trade Unit, in collaboration with the Development Economics Data Group, developed a multi-functional “tool” to aggregate several indicators used to assess the trade competitiveness of a country. We call it the Trade Outcomes Indicators Tool.