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In the lead up to Nairobi, is there hope for global trade governance?

Anabel Gonzalez's picture
 World Trade Organization


The World Bank Group has often argued that delivering outcomes in WTO negotiations around the core issues of the Doha Round is critically important for developing countries. Let’s take one example: with three-quarters of the world’s extreme poor living in rural areas, fulfilling the Doha Round mandate on agriculture could make a real contribution to the Bank Group’s goal of ending extreme poverty by 2030.
 
But recent news reports on global trade talks suggest that WTO Members are finding it hard to develop a shared vision on key issues and are unlikely to deliver significant progress at the upcoming WTO Ministerial Conference in Nairobi from December 15-18. Efforts are being made to produce outcomes on important issues like export competition in agriculture but large gaps remain only one week before the Ministerial Conference.
 
This continued impasse on the Doha Round is indeed a significant missed opportunity, but should this be cause for despair about the future of global trade governance? We don’t think so. There have been developments in the global trade agenda that are worthy of our attention, which should provide some hope in the lead-up to the Nairobi conference that with political will, it is possible to move forward. Here are five of these developments:  
 

Growth and development: Why openness to trade is necessary but not sufficient

Selina Jackson's picture
Photo © Dominic Chavez/World Bank


We are experiencing a battle of ideas regarding the state of the global economy and prospects for growth. Larry Summers has been leading the group of economists proclaiming that the world entered an era of secular stagnation since the global financial crisis. On the other end, Standard Chartered Bank and other players have been arguing that we are experiencing an economic super cycle—defined as average growth of around 3.5 percent from 2000-2030—due to strong growth in emerging markets and fueled by a global demographic dividend.

There is not even agreement on the factors that drive global growth and development. While parts of the Americas and Asia just concluded the Trans Pacific Partnership (TPP) and recent World Trade Organization (WTO) agreements on trade facilitation and information technology products show progress is possible, the Transatlantic Trade and Investment Partnership (TTIP) negotiations between the U.S. and the EU remain highly controversial and the upcoming WTO Ministerial in Nairobi will likely underwhelm. 

However, if you look at the facts, the situation is very clear:

Exploring the nexus between trade policy and disaster response

Selina Jackson's picture
 Nugroho Nurdikiawan Sunjoyo/World Bank


Strong trade connectivity can help disaster response and recovery by ensuring that humanitarian relief goods and services get to where they are needed when disaster strikes.  Trade policy measures, however, can sometimes have adverse effects.  Research led by the World Bank highlights that a common complaint of the humanitarian community is that customs procedures can delay disaster response, leaving life-saving goods stuck at borders.  Other measures such as standards conformity procedures, certification processes for medicines, and work permits for humanitarian professionals can slow the delivery of needed relief items.  Border closures can exacerbate situations already marked by human tragedy and unlock   full-scale economic crises. 
 
This nexus between trade policy and humanitarian response was discussed at an event organized jointly by the International Federation of the Red Cross and Red Crescent Societies (IFRC), the World Bank Group and World Trade Organization at the 5th Global Review of Aid for Trade on June 30 in Geneva.  Among the steps suggested to address concerns were rigorous disaster planning; better coordination between humanitarian actors, implementation of the WTO's Trade Facilitation Agreement and better recognition of the role of services.  

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.

Better trade logistics could jump-start Africa’s light manufacturing industry

Ankur Huria's picture

Zambia-Zimbabwe border crossing. Photo - World Bank.Labor-intensive, light manufacturing industries led the economic transformation of some of the most successful developing countries in the world, including China and Vietnam. In Sub-Saharan Africa, that was simply not the case.  The region’s share of the global light manufacturing market has declined to less than one percent since China’s emergence in the 1980s. Nevertheless, a review of recent trends in exports suggests that some East African countries –Ethiopia, Kenya, Tanzania, Uganda and Zambia – are making headway in light manufacturing industries.

According to the World Bank Group’s 2011 report, “Light Manufacturing in Africa,” the global trading environment “favors Sub-Saharan Africa if it can overcome key constraints in the most promising subsectors.” Those subsectors include the manufacture of food products and beverages; apparel and the dressing and dyeing of fur; wood and wood products; luggage and the tanning and dressing of leather; and fabricated metal products. Sub-Saharan Africa enjoys low labor costs and abundant resources, as well as preferential trade access to US and EU markets for light manufactures. Despite these advantages, the competitiveness of Africa’s light manufacturing industry continues to be undermined by the costs of importing and exporting intermediate inputs of both goods and services. 

Closing thoughts on the "Harnessing Digital Trade for Competitiveness and Development" conference

Rosanna Chan's picture

Fiber optic light bokeh. Source - x_tineDigital 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.

The role of standards in adding value in global value chains

Anabel Gonzalez's picture

Ando International, a Vietnamese garment firm with 900 workers in Ho Chi Minh City, has improved a lot in labour standards since joining Better Work Vietnam. Source - ILO/Aaron SantosConsumers around the world increasingly demand products and services that are simultaneously good for the economy, for the environment, and for society—the triple bottom line of sustainable growth. This rising demand is creating new pathways for businesses and governments to drive change for global good.
 
Global value chains represent one of the key ways the World Bank Group approaches these new opportunities. By better understanding GVCs, low-income countries can become participants in increasingly fragmented international production processes. GVCs thus offer tremendous potential to better connect the poor to the global economy and its benefits—more and better jobs, higher wages, improved labor conditions, and lower environmental impact.
 
That’s why we have been developing a new approach that brings the best of the Bank Group together to help low income countries connect to and upgrade within GVCs. Helping firms in developing countries meet the standards of global buyers and lead firms is a part of this effort, because in today’s sophisticated and highly mobile economy, meeting global standards is no longer optional—it’s a necessary condition for being competitive.

Why are more countries embracing industrial zones? [VIDEO]

Douglas Zhihua Zeng 曾智华's picture
Also available in: 中文

A shipyard crane. Source - Matthew SullivanIn the late 1950s, a group of businessmen and politicians on the outskirts of a small town in western Ireland realized their local airport was in jeopardy of losing its international flights. Knowing how important transit passengers and the airlines were to their economy, a proposal for a special industrial area near the airport was submitted and approved, marking the inception of the world’s first modern free trade zone in Shannon, Ireland. Today, the concept has gone global with an estimated 4,300 various types of zones worldwide. 

All across the world, we have seen countries exploring and seizing the potential of these industrial zones—often also called industrial parks or special economic zones. In East Asia, you can point to the experiences of China, Singapore, Malaysia, the Republic of Korea and Vietnam. In Central America, we have those of the Dominican Republic, Costa Rica, and Honduras. In the Middle East and North Africa, the United Arab Emirates and Jordan have also created zones. In Sub-Sahara Africa, Mauritius first set up an export processing zone all the way back in the 1970s, and today, countries across the region continue to experiment with modern industrial zone regimes.

The concept of the industrial zone is gaining more acceptance globally. The appeal lies in these zones’ ability to catalyze economic development and structural transformation.

为何越来越多的国家“拥抱”工业园区? [VIDEO]

Miles McKenna's picture
Also available in: English

A shipyard crane. Source - Matthew Sullivan在20世纪50年代末,一群在爱尔兰西部一个小城镇郊区的商人和官员们意识到当地机场正面临着失去国际航班的危机。他们深知中转旅客和航空公司对于当地经济的重要性,于是批准了一份在机场附近建立特殊工业区的提案–世界上最早的现代自由贸易区就这样在爱尔兰的香农地区(Shannon)成立了。今天,这一概念已走向世界,据国际劳工组织估计,全球有4300多个不同类型的产业园区。笔者估计实际数目还要高。
 
纵观全球,我们可以看到各国都在探索和挖掘工业园区的潜力,它们通常也被称为开发区、产业园区或经济特区。例如东亚的中国,新加坡,马来西亚,韩国和越南,中美洲的多米尼加共和国,哥斯达黎加和洪都拉斯都有成功的经验。在中东和北非,阿联酋和约旦也成功建造了工业园区。在撒哈拉以南的非洲地区,毛里求斯在20世纪70年代就首次设立了出口加工区并取得成功。如今,各国仍在继续尝试与探索现代工业区制度。
工业园区的概念正在全球范围内获得更多的认可,其吸引力在于这些园区有着促进经济发展和结构转型的巨大潜力。

South-South investment: development opportunities and policy agenda

Anabel Gonzalez's picture
Worker in a factory in India. Photo - Ray Witlin / World Bank.The growing phenomenon of investment by developing country firms in other developing countries – sometimes referred to as ‘South-South investment’– offers significant development opportunities for the World Bank Group’s client countries. Obtaining a detailed picture of South-South investment flows and stocks is difficult because in many countries data on foreign direct investment (FDI) are inaccurate and insufficiently disaggregated. Still, the overall trend is fairly clear:
  • 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.

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