A new report, From Hair Stylists and Teachers to Accountants and Doctors - The Unexplored Potential of Trade in Services in Africa, indicates that African countries are trading in services, often in unexpected ways. Africa’s export potential in traditional services, such as tourism, is clearly recognized, but the emerging success of exports of nontraditional services is often overlooked. Hairdressers, doctors, educators, and accountants are all examples of service providers who are moving across borders to take advantage of employment opportunities away from home. Many of these workers are finding opportunity in the informal sector, driven to other countries due to poverty and lack of opportunities at home. Read more in the feature story and report
Nepal is a country full of untapped potential, but several obstacles stand in its way of becoming a more modern and globally connected economy. Outdated trade and investment policies hurt exporters especially and make it difficult for them to reach markets in developed countries. A new World Bank Group report takes stock of current participation in global markets and makes recommendations on how the country can increase trade integration and boost its economy.
China remains the world’s largest apparel exporter, but apparel as a share of its total exports has been falling. The "Stitches to Riches" report finds that countries in South Asia have an opportunity to grow their apparel exports, creating much-needed jobs, especially for women.
The recent global financial crisis was closely followed by a trade collapse. Global trade plunged by 23% in 2008-2009. Despite a rebound in 2010-2011, trade growth has been almost stagnant ever since and is predicted by the WTO in its April 7 2016 press release to remain sluggish, a grim outlook compared to the expansions in pre-crisis times (Constantinescu et al., 2015). What were the underlying micro sources of this trade collapse: were exporters’ ability to participate in foreign markets or their pace of growth most hurt? Evidence from high-income countries shows that declines in the intensive margin—average exporter size—explain most of the decline in global trade, compared to the fall in the extensive margin—the number of exporters. But what about developing countries?Download and query Exporter Dynamics Database indicators
The recently released Exporter Dynamics Database (EDD) version 2.0 with its indicators on both margins of trade at a micro level for 70 countries (of which 56 developing countries) can help answer this question. The EDD can be downloaded in bulk from the World Bank Microdata catalog and now it is also available for customized queries in the World Bank Databank. The EDD indicators for developing countries show that a decline in the average size of exporters was the key factor behind the decline in total exports resulting from the global financial crisis.
The World Bank Group’s Enterprise Surveys benchmark the business environment based on actual experiences of firms. In a new blog series we kicked off last week, we’re sharing these findings from recently analyzed surveys conducted through extensive face-to-face interviews with managers and owners of firms in several countries.
In this post we focus on Afghanistan. We’ve conducted a survey with 410 firms across five regions and four business sectors—manufacturing, construction, retail, and services.
The International Monetary Fund (IMF) has noted that considerable political and security uncertainties have posed challenges for Afghanistan. Furthermore, the financial sector has been vulnerable with eight out of 15 banks classified as weak in late 2014. Within this context, the Afghanistan Enterprise Surveys (ES) shed light on several interesting findings:
Corruption is a challenge
According to the Afghanistan Enterprise Survey, firms face almost a 50 percent chance of having to pay a bribe if they applied for an electricity connection, tried to obtain permits, or met with government officials for tax purposes (“Bribery incidence”). This is more than double of what private firms in landlocked developing countries experience on average.
The private sector continues to be a critical driver of job creation and economic growth. However, several factors can undermine the private sector and, if left unaddressed, may impede development. Through extensive face-to-face interviews with managers and owners of firms, the World Bank Group's Enterprise Surveys benchmark the business environment based on actual experiences of firms. A series of blogs, starting today, share the findings from recently analyzed surveys conducted in several countries.
The Namibia Enterprise Surveys consisted of 580 interviews with firms across three regions and three business sectors – manufacturing, retail, and other services. So what are some key highlights from the surveys?
Exports take on average 8 days to clear through customs but varies according to firm size
In 2013, it took a firm in Namibia about eight days to clear exports through customs, which is considerably more than the two days it took in 2006. Despite this increase, the average time to clear direct exports through customs is still about the same as in the upper middle income countries (8 days) and lower than the Sub-Saharan Africa regional average (10 days). Moreover, there is a wide variation across firm size. For a small firm, it takes about 17 days on average to clear exports through customs, compared to around six days for medium-sized firms and about two days for large firms.
Clearing imports, in contrast, through customs is considerably faster in Namibia (five days) than the average for upper middle income countries (11 days) and Sub-Saharan Africa average (17 days).
(Source: FRED Economic Data)
A recent World Bank Group feature story broke down country by country the potential regional consequences. And according to the Bank Group’s Global Economic Prospects report, the decline in oil prices will dampen growth prospects for oil-exporting countries.
There are various factors that can be used to assess the impact of falling oil prices on countries. One such factor is trade. Countries exporting mostly fuel products will lose export revenue as oil prices drop. The chart below shows the top 15 countries that exported fuel in 2012. You can visualize the data for other years and products using the World Integrated Trade Solution’s (WITS) product analysis visualization tool.
One of the core principles of trade economics is that of “comparative advantage.” First described by David Ricardo, the theory says that countries are best off if they specialize in products that they can make relatively more efficiently – with lower opportunity cost – than other countries. If this happens, the theory goes, global welfare will increase. This concept is more difficult than it sounds, however – as Paul Krugman has pointed out quite eloquently – and benefits from illustration.
Basketball genius Michael Jordan stars in one example sometimes used in textbooks and classrooms: If Jordan mows his lawn faster than anyone else in the neighborhood, he has anabsolute advantage in lawn mowing. But that doesn’t mean that he should mow his neighbor John Smith’s lawn, because that would come at an opportunity cost: in the same two hours it would take Jordan to cut the grass, he could earn much more by playing basketball or making a commercial.
While it is difficult to measure comparative advantage in world trade, one indicator is something called “Revealed Comparative Advantage” (RCA). This is a measure of how a country’s exports compare to those of a bigger group, such as a region or the rest of the world. For example, if a country’s RCA in wheat is high (typically greater than one), that means wheat makes up a higher share of that country’s total exports than it does of the world’s exports. This suggests that that country is a more efficient wheat-producer than the average country.
But countries don’t always produce the products in which they have a revealed comparative advantage. Sometimes Michael Jordan mows the lawn. Let’s take a look at a couple of examples from this new data visualization tool.
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
Merchandise trade has become an increasingly important contributor to a country’s gross domestic product (GDP), particularly for developing countries. Before the global financial crisis hit in 2008, merchandise trade as a percent of GDP for low- and middle-income economies was 57 percent, about 5% higher than for high-income economies. This is very evident in Europe and Central Asia (ECA) where merchandise trade accounts for 73 percent of the developing region’s GDP. Many ECA countries including Hungary, Belarus, and Bulgaria have merchandise trade to GDP ratios above 100 percent (155, 136, and 114 percent respectively in 2011), meaning merchandise exports are a large contributor to their overall economy.