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From potato eaters to world leaders in agriculture

Priti Kumar's picture
 Raj Ganguly
Matching sheer ingenuity with technological prowess, the Netherlands (pop: 17 millions; about the size of Haryana state in India) today is one of the world’s most agriculturally productive countries, feeding people across the globe from its meager land area. Photo credit: Raj Ganguly

Van Gogh’s famous painting of Potato Eaters depicts a family of poor peasants seated around a dinner table eating their staple fare. The artist confessed that this work is deeply reflective of the hard work that Dutch peasants have to do to earn a bare meal. Van Gogh frequently painted the harvest and often compared the season to his own art, and how he would someday reap all that he had put into it. 

Since those difficult times in the late 1800s, the tiny country of the Netherlands (pop: 17 mill; about the size of Haryana state in India) has come a long way. Matching sheer ingenuity with technological prowess, the Netherlands today is one of the world’s most agriculturally productive countries, feeding people across the globe from its meager land area. Indeed, this small nation is now the world’s second-largest exporter of agri-food products including vegetables, fruits, potatoes, meat, milk and eggs; some 6% of world trade in fruits and 16% in vegetables comes from the Netherlands.

But how exactly did they do this? In October 2017, we went to find out. Our team - of World Bank and Indian government officials working on agribusiness, rural transformation and watershed development projects – sought to learn from Dutch experience and identify opportunities for future collaboration. We met farmer cooperatives, private companies, growers’ associations, academia, social enterprises, and government agencies, and gained fascinating insights.

Primarily, we found that a convenient location, a conducive climate, investments in high-quality infrastructure, high-caliber human capital, an enabling business environment and professionally-run private companies have provided the Netherlands with that unmistakable competitive edge:

Maximizing agricultural output with minimum land and labor

Located conveniently as a gateway to Europe, the Netherlands acts as a transit hub for agricultural produce, importing Euro 4.6 billion worth of produce from 107 countries, adding value to these products through collection, re(packaging) and processing, and exporting almost double that value - Euro 7.9 billion - to more than 150 nations. In 2014, Dutch growers had a turn-over of euro 2.9 billion in fruit and vegetables, produced with a minimum of land and labor - only 55,000 hectares and just 40,000 people - indicating a heavy reliance on automation.

The Legacy of Saman Kelegama

Sanjay Kathuria's picture
Saman Kelegama, a Sri Lankan economist and the Executive Director of the Institute of Policy Studies (IPS Sri Lanka) died prematurely in June 2017. He was a champion of deeper South Asian cooperation.
Saman Kelegama, a Sri Lankan economist and the Executive Director of the Institute of Policy Studies (IPS Sri Lanka) died prematurely in June 2017. He was a champion of deeper South Asian cooperation. Credit:  Institute of Policy Studies

I first met Saman in the early 1990s in Delhi.  Over the years, our paths diverged.  When I re-engaged on South Asia, I ran into Saman again. We re-connected instantly, despite the long intervening period.  This was easy to do with Saman—soft-spoken, affable, a gentleman to the core.  He bore his considerable knowledge lightly.  

Despite his premature passing away in June 2017, he left a rich and varied legacy behind him. I will confine myself to discussing his insights on regional cooperation in South Asia, based on his public writings and my interactions with him.

Saman was a champion of deeper economic linkages within South Asia. He was also pragmatic. 

Along with a few other regional champions, Saman, as the head of the Institute of Policy Studies in Colombo, helped to kick-start the “South Asian Economic Summit”, or SAES, in Colombo in 2008, to provide a high-profile forum for dialogue on topical issues, especially South Asian regional integration. It is remarkable that the SAES has endured, without any gap. The fact that the policy and academic fraternity meet with unfailing regularity, despite on-and-off political tensions in the region, is testimony to its value.

Saman repeatedly stressed that Sri Lanka has been able to reap benefits from the India-Sri Lanka FTA (ISFTA), contrary to the general belief. His arguments were powerful: the import-export ratio for Sri Lanka improved from 10.3 in 2000 (the start of the ISFTA) to 6.6 in 2015; about 70 percent of Sri Lanka’s exports to India get duty-free access under the FTA, but less than 10 percent of Sri Lanka’s imports from India come under the FTA (since India provided “special and differential treatment” to Sri Lanka).

Measuring South Asia’s economy from outer space

Martin Rama's picture
New technologies offer an opportunity to strengthen economic measurement. Evening luminosity observed from satellites has been shown to be a good proxy for economic activity.
New technologies offer an opportunity to strengthen economic measurement. Evening luminosity observed from satellites has been shown to be a good proxy for economic activity.
Economic growth is a key concern for economists, political leaders, and the broader population.

But how confident are we that the available data on economic activity paints an accurate picture of a country’s performance?

Measuring Gross Domestic Product (GDP), the most standard measure of economic activity, is especially challenging in developing countries, where the informal sector is large and institutional constraints can be severe.

In addition, many countries only provide GDP measures annually and at the national level. Not surprisingly, GDP growth estimates are often met with skepticism.
 
New technologies offer an opportunity to strengthen economic measurement. Evening luminosity observed from satellites has been shown to be a good proxy for economic activity.

As shown in Figure 1, there is a strong correlation between nightlight intensity and GDP levels in South Asia: the higher the nightlight intensity on the horizontal axis, the stronger the economic activity on the vertical axis.
Figure 1 Nightlight intensity increases with economic activity
Figure 1 Nightlight intensity increases with economic activity

However, measuring nightlight is challenging and comes with a few caveats. Clouds, moonlight, and radiance from the sun can affect measurement accuracy, which then requires filtering and standardizing.

On the other hand, nighlight data has a lot advantages like being available in high-frequency and with a very high spatial resolution. In the latest edition of South Asia Economic Focus, we use variations in nightlight intensity to analyze economic trends and illustrate how this data can help predict GDP over time and across space.

Bicycles can boost Bangladesh's exports

Nadeem Rizwan's picture
Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall
Bicycles are the largest export of Bangladesh’s engineering sector, contributing about 12 percent of engineering exports. Credit: World Bank
This blog is part of a series exploring new sources of competitiveness in Bangladesh

Did you know that Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall?

Bicycles are the largest export of Bangladesh’s engineering sector, contributing about 12 percent of engineering exports.
 
This performance is in large part due to the high anti-dumping duty imposed by the EU against China.
 
Recently, the EU Parliament and the Council agreed on EU Commission’s proposal on a new methodology for calculating anti-dumping on imports from countries with significant market distortions or pervasive state influence on the economy.
 
This decision could mean that the 48.5 percent anti-dumping duty for Chinese bicycles may not end in 2018 as originally intended. China is disputing the EU’s dumping rules at the World Trade Organization.
 
As the global bicycle market is expected to grow to $34.9 billion by 2022, Bangladesh has an opportunity to diversify its exports beyond readymade garments. Presently, Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall.
Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall
EU27 bicycle imports in 2016 (Million $). Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall. Source: UNComtrade through WITS

However, if the EU anti-dumping duty against China is reduced or lifted after 2018, Bangladesh’s price edge might be eroded.
 
Bangladeshi bicycle exporters estimate that without anti-dumping duties, Chinese bicycles could cost at least 10-20 percent less than Bangladeshi bicycles on European markets. And Chinese exporters can ship bicycles to the EU market with 35-50 percent shorter lead times.
 
So, how can Bangladeshi bicycles survive and grow?

ශ්‍රී ලංකාවේ ආනයන සහ අපනයන යෙදෙන්නන්ගේ තොරතුරු දැනගැනීමේ අයිතිය තහවුරු කිරීම

Dinesha Nilakshi Samaranayake's picture

පසුගිය සැප්තැම්බර් මස 28 වෙනිදා ජාත්‍යන්තර තොරතුරු දැනගැනීමේ දිනය වශයෙන් රජය විසින් ප්‍රකාශයට පත් කරනු ලැබුවා. විශ්වයේම තොරතුරු ඇසුරු සැණකින් අතේ තිබෙන ජංගම දුරකථනය හරහා ලබාගත හැකි යුගයක තොරතුරු දැනගැනීමේ අයිතිය තහවුරු කරන්න වෙනම දිනයක් අවශ්‍ය දැයි ඔබට සිතෙන්නටත් පුළුවන්. නමුත් දිනපතා සිය භාණ්ඩ රේගුවෙන් නිදහස් කරගැනීමට පොර බදන කුඩා හෝ මධ්‍ය පරිමාණ වෙළඳ  මහතකුගෙන් මේ ගැන විමසුවොත්, සමහර විට ඔබේ එම අදහස වෙනස් වේවි .



කොළඹ, ගාලු පාරේ, සිය කාර්යාලයේ සිට ආනයන-අපනයන වෙළඳාම පවත්වාගෙන යන චමිල් පෙරේරාට තමන්ගේ ආනයන භාණ්ඩ රේගුවෙන් නිදහස් කරගැනීමේ ක්‍රියාවලිය ප්‍ර‍තිවාදියෙකු සමඟ පොර බැදීමකට දෙවැනි නැහැ. චමිල් වගේ බොහෝ පිරිස් තමන්ගේ වෙළඳාම් කටයුතු හරහා රටට ආදායමක් උපදවා දෙන අතරම නව රැකියා අවස්ථා උත්පාදනයටත් දායකත්වය ලබා දෙනවා. නමුත් ඉහත කී ක්‍රියාවලියේ දී රේගු කටයුතු ගැන හරි තොරතුරු ලබා ගැනීමට තිබෙන නොහැකියාව වගේම ක්‍රියාවලියේ ඇති සංකීර්ණ බව නිසා විශාල ලෙස කාලය හා මුදල් නාස්ති වීමකට ඔවුන් මුහුණ දෙනවා.

Trade facilitation reform in Sri Lanka can drive a change in culture

Marcus Bartley Johns's picture

Two years ago, we started counting how many Sri Lankan agencies were involved in trade facilitation processes such as issuing permits and managing the movement of goods in and out of the country.  We counted at least 22 agencies in this assessment, and today, the Department of Commerce estimates that number at least 34 agencies are involved in issuing permits or publishing regulations that affect trade.
 
We know trade is critical to Sri Lanka’s future and that there are strong links between trade, economic growth and poverty reduction.

However, the trading community reports a lack of transparency, confusion around rules and regulations, poor coordination between various ministries and a dearth of critical infrastructure—you can see why trade has suffered in Sri Lanka.

 

When the World Bank evaluates a country’s performance in critical rankings like Doing Business, the ease of trading across borders is one of the benchmarks we consider. In this, and in other lists like the Logistics Performance Index, Sri Lanka is underperforming compared with its potential. Here, the average trade transaction involves over 30 different parties with different objectives, incentives, competence and constituencies they answer to, and up to 200 data elements, many of which are repeated multiple times. This environment constrains the growth of Sri Lanka’s private sector, especially SMEs.  
 
But now for the good news. By ratifying the World Trade Organisation Trade Facilitation Agreement, Sri Lanka has signalled its determination to intensify reform efforts.

Six reasons why Sri Lanka needs to boost its ailing private sector

Tatiana Nenova's picture
 Joe Qian / World Bank
A view of the business district in Colombo. Credit: Joe Qian / World Bank

Sri Lanka experienced strong growth at the end of its 26-year conflict. This was to be expected as post-war reconstruction tends to bring new hope and energy to a country.
 
And Sri Lanka has done well—5 percent growth is nothing to scoff at.  
 
However, Sri Lanka needs to create an environment that fosters private-sector growth and creates more and better jobs. To that end, the country should address these 6 pressing challenges:

1. The easy economic wins are almost exhausted

For a long time, the public-sector has been pouring funds into everything from infrastructure to healthcare. Unfortunately, Sri Lanka’s public sector is facing serious budget constraints. The island’s tax to growth domestic product (GDP) ratio is one of the lowest in the world, falling from 24.2% in 1978 to 10.1% in 2014. Sri Lanka should look for more sustainable sources of growth. As in many other countries, the answer lies with the private sector.
 
2. Sri Lanka has isolated itself from global and regional value chains 

Over the past decades, Sri Lanka has lost its trade competitiveness. As illustrated in the graph below, Sri Lanka outperformed Vietnam in the early 1990s on how much of its trade contributed to its growth domestic product. Vietnam has now overtaken Sri Lanka where trade has been harmed by high tariffs and para-tariffs and trade interventions on agriculture.


Sri Lanka dropped down by 14 notches to the 85th position out of 137 in the recent  Global Competitiveness Index.
           
3. The system inhibits private sector growth

Sri Lanka’s private sector is ailing. Sri Lankan companies are entrepreneurial and the country’s young people are smart, inquisitive, and dynamic. Yet, this does not translate into a vibrant private sector. Instead, public enterprises are the ones carrying the whole weight of development in this country.
 
The question is, why is the private sector not shouldering its burden of growth?


From the chart above, you can see how difficult it is to set up and operate a business in Sri Lanka. From paying taxes to enforcing contracts to registering property, entrepreneurs have the deck stacked against them.
 
Trading across borders is particularly challenging for Sri Lankan businesses. Trade facilitation is inadequate to the point of stunting growth and linkages to regional value chains. The chart explains just why Sri Lanka is considered one of the hardest countries in the world to run a trading business. Compare it to Singapore–you could even import a live tiger there without a problem.

Bangladesh corridor vital to India’s ‘Act East’ policy

Sanjay Kathuria's picture
India-Bangladesh land border crossing, Photo by Sanjay Kathuria
India-Bangladesh land border crossing. Credit: Sanjay Kathuria

Deepening connectivity and economic linkages between India and Bangladesh will be critical for the success of India’s ‘Act East’ policy.

Here are five priority areas that have the potential to change the economy of Northeast India:

1. Transport Connectivity

After 1947, Northeast (NE) India has had to access the rest of India largely via the “Chicken’s Neck” near Siliguri, greatly increasing travel times. Traders travel 1600 km from Agartala (Tripura) to Kolkata (West Bengal) via Siliguri to access Kolkata port. Instead, they can travel less than 600 kms to reach the same destination via Bangladesh, or even better, travel only 200 km to access the nearby port of Chittagong in Bangladesh.

This is set to change as close cooperation between Bangladesh and India (including various ongoing initiatives such as the transshipment of Indian goods through Bangladesh’s Ashuganj port to Northeast India, expanding of rail links within Northeast India and between the two countries, the BBIN Motor Vehicles Agreement) can dramatically reduce the cost of transport between Northeast India and the rest of India.

The resultant decline in prices of goods and services can have a strong impact on consumer welfare and poverty reduction in the Northeast. Such cooperation also opens up several additional possibilities of linking India with ASEAN via Myanmar.

Moving forward, expanding direct connectivity between NE India and the rest of India via Bangladesh, while giving Bangladesh similar access to Nepal and Bhutan via India, is critical.

2. Digital Connectivity

Broadband connectivity of 10 gbps is now being provided from Bangladesh’s Cox’s Bazar to Tripura and beyond, to help improve the speed and reliability of internet access in NE India. Bangladesh has the capacity to provide more.

Reforms Sri Lanka needs to boost its economy

Idah Z. Pswarayi-Riddihough's picture
 Joe Qian/World Bank
The Colombo Stock Exchange. Credit: Joe Qian/World Bank

Many Sri Lankans understand the potential benefits of lowering trade costs and making their country more competitive in the global economy. The majority, however, fear increased competition, the unfair advantage of the private sector from abroad and limited skills and innovation to compete.

Yet, Sri Lanka’s aspirations cannot be realized in the current status quo.  

While changes in trade policies and regulations will undeniably improve the lives of most citizens, I’m mindful that some are likely to lose. However, many potential gainers of the reforms who are currently opposed to them are unaware of their benefits.

Implementing smart reforms means that government funds will be used more effectively for the people, improve access to better healthcare, education, basic infrastructure and provide Sri Lankans with opportunities to get more and better jobs. Let me focus on a few reforms that I believe are critical for the country.  First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.    

First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services.

Fresh thinking on economic cooperation in South Asia

Nikita Singla's picture
 Aamir Khan/ Pakistan, Sreerupa Sengupta/ India, Sanjay Kathuria/ World Bank, Mahfuz Kabir & Surendar Singh/ Bangladesh) Photo By: Marcio De La Cruz/ World Bank
Young Economists sharing the stage with Sanjay Kathuria, Lead Economist and Coordinator, Regional Integration (Left to Right: Aamir Khan/ Pakistan, Sreerupa Sengupta/ India, Sanjay Kathuria/ World Bank, Mahfuz Kabir/Bangladesh & Surendar Singh/ India). Photo by: Marcio De La Cruz/ World Bank


That regional cooperation in South Asia is lower than optimal levels is well accepted. It is usually ascribed to – the asymmetry in size between India and the rest, conflicts and historical political tensions, a trust deficit, limited transport connectivity, and onerous logistics, among many other factors.

Deepening regional integration requires sufficient policy-relevant analytical work on the costs and benefits of both intra-regional trade and investment. An effective cross-border network of young professionals can contribute to fresh thinking on emerging economic cooperation issues in South Asia.

Against this background, the World Bank Group sponsored a competitive request for proposals.  Awardees from Bangladesh, India, and Pakistan, after being actively mentored by seasoned World Bank staff over a period of two years, convened in Washington DC to present their new and exciting research. Research areas included regional value chains, production sharing and the impact assessment of alternative preferential trade agreements in the region.

Young Economists offer fresh thoughts on economic cooperation in South Asia

Mahfuz Kabir, Acting Research Director, Bangladesh Institute of International and Strategic Studies and Surendar Singh, Policy Analyst, Consumer Unity Trust Society (CUTS International) presented their research: Of Streams and Tides, India-Bangladesh Value Chains in Textiles and Clothing (T&C). They focus on how to tackle three main trade barriers for T&C: a) high tariffs for selected, but important goods for the industries of both countries; b) inefficient customs procedures and c) divergent criteria for rules of origin classification.

Sreerupa Sengupta, Ph.D. Scholar at Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi discussed Trade Cooperation and Production Sharing in South Asia – An Indian Perspective. Reviewing the pattern of Indian exports and imports in the last twenty years, her research focuses on comparing the Global Value Chain (GVC) participation rate of India with East Asian and ASEAN economies. Barriers to higher participation include a) lack of openness in the FDI sector; b) lack of adequate port infrastructure, and long port dwell times; and c) lack of Mutual Recognition Agreements (MRAs).

Aamir Khan, Assistant Professor, Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad presented his work on Economy Wide Impact of Regional Integration in South Asia - Options for Pakistan. His research analyzes the reasons for Pakistan not being able to take full advantage of its Free Trade Agreement (FTA) with China, and finds that the granting of ASEAN-type concessions to Pakistan in its FTA with China would be more beneficial than the current FTA arrangement. The work also draws lessons for FTAs that are currently being negotiated by South Asian countries.

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