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Global Economy

Impacts on Global Trade and Income of Current Trade Disputes

Caroline Freund's picture

Much has been written on the escalation of the trade dispute. What hasn’t been discussed is what will be the impact on developing nations who rely on trade as an engine of economic growth for ending poverty.  

As tariffs are beginning to be imposed, my team analyzed the impact of these new tariffs and the potential for tariff escalation in developing countries in a new World Bank working document. We found that the new trade tariffs will depress bilateral trade, disrupt global supply chains, and increase demand for substitutes from developing countries.  
 

Photo Source: Avigator Fortuner, Shutterstock

Exposure of Belt & Road Economies to China Trade Shocks

Paulo Bastos's picture
The Belt and Road (B&R) Initiative seeks to deepen regional integration by improving infrastructure and strengthening trade and investment linkages along the old Silk Road, from China to Europe. With several infrastructure projects already ongoing, the initiative is expected to progressively reduce trade costs over the coming decades, and hence generate long-run economic gains for B&R economies.
 
Photo: Rob Beechey / World Bank

Three Opportunities and Three Risks of the Belt and Road Initiative

Michele Ruta's picture

The Belt and Road Initiative (BRI) is an ambitious effort to deepen regional cooperation and improve connectivity on a trans-continental scale. While the scope of the initiative is still taking shape, the BRI consists primarily of the Silk Road Economic Belt, linking China to Central and South Asia and onwards to Europe, and the New Maritime Silk Road, linking China to the nations of South East Asia, the Gulf Countries, North Africa, and on to Europe. Six other economic corridors have been identified to link other countries to the Belt and the Road.

Five actions that matter to the future of Aid for Trade

Anabel Gonzalez's picture
This week, myself and colleagues from the World Bank Group will participate in the World Trade Organization’s Sixth Global Review of Aid for Trade. The bi-annual meetings, held at WTO headquarters in Geneva, bring together trade ministers, civil society, international development institutions and the private sector to monitor progress made toward connecting developing countries to the global trade system.

Steps to Better Data on E-Trade for Developing Countries

Michael Ferrantino's picture
UNCTAD’s E-Commerce Week took place recently in Geneva, Switzerland. This third E-Commerce Week was the largest ever, with over 900 registered participants, plus walk-ins from the Geneva community. This is nearly triple last year’s attendance. The large turnout reflected the heightened interest of developing countries in e-commerce as a tool for promoting economic growth and opportunity. Highlights of the week included the launch of the online platforms for the multi-stakeholder E-Trade For All initiative  and its private-sector partner Business For E-Trade Development, and a special panel on digital transformation for small businesses and entrepreneurs, featuring Alibaba’s Jack Ma.

TCdata360: Filling Gaps in Open Trade and Competitiveness Data

Klaus Tilmes's picture
The World Bank Group just launched a new open data platform for trade and competitiveness – TCdata360. Try it today and share your visuals on Twitter with the hashtag #TCdata360.

Open data – statistics that are accessible to all at little or no cost – is a critical component of global development and the World Bank Group’s twin goals of ending poverty and boosting shared prosperity. How can we measure progress towards our objectives without a method of tracking how far we’ve come?

Why regional integration is so important for resource-driven diversification in Africa

Gözde Isik's picture
Industrial area in Kitwe, Zambia / Photo: Arne Hoel


Natural resources management, particularly in the extractives industry, can make a meaningful contribution to a country’s economic growth when it leads to linkages to the broader economy. To maximize the economic benefits of extractives, the sector needs to broaden its use of non-mining goods and services and policymakers need to ensure that the sectors infrastructure needs are closely aligned with those of the country’s development plans.

In Africa, especially, mining and other companies that handle natural resources traditionally provide their own power, railways, roads, and services to run their operations. This “enclave” approach to infrastructure development is not always aligned with national infrastructure development plans.

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

Thoughts on competition policy from Anabel Gonzalez, Senior Director of the WBG Trade and Competitiveness Global Practice

Julia Oliver's picture

Anabel Gonzalez, Senior Director of the the World Bank Group's Trade and Competitiveness Global Practice, has published a new blog post on competition policy, "From Tirole to the WBG Twin Goals: Scaling up competition policies to reduce poverty and boost shared prosperity." The piece addresses the links between competition policies, economic growth, and household welfare. It also explains how the Global Practice is scaling up support to governments on effective competition policies.

Read more here.

Ensuring the poor benefit from global trade

Anabel Gonzalez's picture

A woman brings onions to market in Mali. Photo - Irina Mosel / ODI via Flickr Creative CommonsThis week the World Bank Group, the largest multilateral provider of aid for trade, is participating in the World Trade Organization’s 5th Aid for Trade Global Review. Every two years, the Global Review brings together participants in global trade from all over the world, including trade ministers, the heads of international development institutions, the private sector and civil society. We will be focused on the role of trade in helping achieve the Bank Group’s Twin Goals: ending poverty and boosting shared prosperity.

The role of trade in ending poverty is the subject of a new WTO-World Bank Group publication being launched on 30 June, the first day of the Review.  The report argues that to achieve the end of poverty by 2030, more needs to be done to connect the nearly one billion people who remain in extreme poverty to trade opportunities. On 30 June the report will be available online, along with further details about the agenda it sets out for maximizing the gains of trade for the poorest.

A critical part of this effort, and the theme of this year’s Aid for Trade meeting, is the importance of reducing the costs of trade. The Bank Group is publishing new analysis at the review, using a database we have developed with UNESCAP, which illustrates how the costs of getting goods to overseas markets are significantly higher for developing countries. For example, low income countries face costs that are on average three times higher than for advanced economies. Landlocked countries and small islands also face particularly high trade costs. The reasons vary, but include poor road networks, weak logistics, inadequate port facilities, antiquated customs procedures, corruption at border crossings, and outdated legal and regulatory structures. Lowering these trade costs makes firms in developing countries more competitive, allowing them to benefit more from trade opportunities. Implementing the Trade Facilitation Agreement will help, and will be an important focus for us at the Review, but the greatest impact will be achieved by comprehensive strategies to tackle these wide-ranging sources of trade costs.

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