Countries that want to use preferential trade agreements to boost trade with Africa should re-examine the rules of engagement. New evidence shows that certain rules underlying preferential trade agreements are drastically hindering their intended benefits. In fact, in a World Bank Policy Research Paper and an article forthcoming in The World Bank Economic Review, we find that relaxing those definitions could increase the agreements’ benefits by four times more than just removing tariffs.
In February, the United Nations named 2013 the Year of Quinoa and made the president of Bolivia and the first lady of Peru special ambassadors to the UN’s Food and Agriculture Organization (FAO). The World Bank joined in with a kick-off event and celebration of Bank-funded work that is helping Bolivian quinoa farmers bring their product to market. The focus on this nutritious “super-food,” which is grown mainly in the Andean highlands, is an effort to decrease hunger and malnutrition around the world.
Quinoa (pronounced KEEN-wa) has long had good-for-you credentials. In 1993, a NASA technical report named it a great food to take into space. (“While no single food can supply all the essential life sustaining nutrients, quinoa comes as close as any other in the plant or animal kingdom.”) The pseudo-grain –which is more closely related to beets and spinach than to wheat or corn – has been promoted in recipes distributed by the National Institutes of Health, the Mayo Clinic and the American Institute for Cancer Research. In fact, quinoa already has done quite well on the world stage. Global import demand has increased 18-fold in the last decade, mainly due to consumption in Europe, Canada, and the U.S.
About "Notes From the Field": With this occasional feature, we let World Bank professionals who are conducting interesting trade-related projects around the globe explain some of the challenges and triumphs of their day-to-day work.
The interview below is with Pablo Fajnzylber, who recently became sector Manager for the Poverty Reduction and Economic Management (PREM) network in East Africa. The interview took place while Mr. Fajnzylber was Lead Economist and Sector Leader for PREM in Brazil. Prior to that, he worked at the Chief Economist’s Office for the Latin America and Caribbean region, the Finance and Private Sector Development Department for the same region and the Bank’s Development Economics Research Group. Mr. Fajnzylber has published extensively on a variety of development topics, including various books and articles in professional journals on issues related to growth, international trade, informality, crime, workers’ remittances, private sector development and climate change.
Governments and policy makers often look to small and medium-sized enterprises to drive growth in developing economies. These SMEs are held up as incubators of creativity and entrepreneurship, pushing the market to change, expand, and better meet consumer needs. But perhaps SMEs aren’t the only category to applaud. Research has shown that certain firms, regardless of their size, create jobs, export goods, and generally grow faster than others. We think these are the firms to watch.
To explain, we use an animal analogy developed by David Birch. Birch classified firms into “mice,” small firms that tend to stay small; “elephants,” large firms that do not grow rapidly; and “gazelles,” firms that both grow rapidly and account for a large share of employment or revenue growth. These gazelling firms are key to nascent, growing economies. As Caroline Freund and Martha Denisse Peirola show in Export Superstars, a World Bank Research Policy Paper, it is often a few big firms that account for the lion’s share of national exports. Not only are these few good firms responsible for the largest growth in exports, they also contribute most of the export diversification. In fact, countries’ relative comparative advantage is defined by these large, well-performing firms.