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?
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.
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 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.
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. 
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.
This 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.
Digital entrepreneurs have the potential to connect to global markets like never before. Whether selling physical goods on internet platforms, or providing digital goods and services that can be downloaded and streamed, an entirely new ecosystem of innovative micro and small businesses has emerged in the developing world.
The World Bank Group hosted some of the pioneers in this space for a full-day conference on Harnessing Digital Trade for Competitiveness and Development on May 19. Here, we heard entrepreneurial success stories—an online platform for jewelry in Kenya, a provider of software solutions in Nepal, an online platform for livestock trade in Serbia—and dove into the constraints and challenges of running a digital business in an emerging economy.
The scope of these challenges made these success stories, and the broader potential they represent, even more inspiring. From internet connectivity to logistics, from financial payments to trade regulations, from bankruptcy laws to entrepreneurial and consumer digital literacy-- clearly, more needs to be done to fully harness the potential of digital trade for competitiveness and development and to foster an enabling environment to digital trade.
- South-South FDI is seeing important growth. According to OECD stocktaking, the share of South-South FDI in total world FDI has grown from some 3% at the beginning of the century to around 14% in 2009. See the OECD’s Development Co-operation Report 2014.
- South-South FDI has stayed strong even as global FDI has been volatile. Despite a fall in FDI from OECD countries by 57% below 2007 levels in 2012, FDI from developing countries rose by 19 percent, according to the OECD’s Development Co-operation Report 2014.
- South-South mergers can lead to economic upgrading. In 2013, over two-thirds of gross cross-border mergers and acquisitions by Southern multinational enterprises (MNEs) targeted partners in developing and transition countries, and half of these involved foreign affiliates of MNEs from developed countries passing their assets on to MNEs from developing countries, according to UNCTAD’s World Investment Report 2014.
In today's edition of EurActiv, Anabel Gonzalez, senior director of the World Bank Group's Trade and Competitiveness Global Practice, calls on the international community to watch out for the poor amid new momentum and excitement in the global trade landscape.
Read the full opinion piece here: Make 2015 a year of world trade action.
“Ask anyone you meet on the street whether political risk has risen in the last few years, and you’d likely get a convincing yes,” a high official from Canada’s Export Development Center recently wrote.
Investors have always worried about the political landscape in host markets. But it’s true. Concerns over political risk are on the rise.
The most recent EIU’s Global Business Barometer shows that the proportion of executives that identified political risk as one of their main concerns increased from 36 percent in 2013 to 42 percent in 2014. MIGA’s Political Risk Survey tells a similar story: 20 percent of investors identified political risk as the most important constraint on Foreign Direct Investment (FDI) in developing economies. Indeed, according to risk management firm AON, political risk is now tenth on the list of main risks facing organizations today and is likely to rise in the ranking in the next few years.
With FDI from emerging markets also on the rise, are the concerns of these investors any different?