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Trade

Helping Small Business To Be an Engine of Growth and Employment

Anabel Gonzalez's picture

Man arranging bananas by the road. Malita, Davao City, Philippines. Photo - Kate Bacungco / World BankIn developing countries, small businesses employ a disproportionate share of the population: SMEs comprise two-thirds of formal private sector employment in emerging markets and create 95 percent of jobs in low income countries. They take many forms, from mobile food vendor to technology firm, and they can be incubators of creativity. But, as studies have shown, on average, they account for a smaller share of productivity growth than large firms.

This week I am in Kigali, Rwanda, to participate in the World Export Development Forum. Its theme is: “SMEs: creating jobs through trade.” At this forum, government and business leaders will discuss the role of SMEs in international trade and strategies for increasing their participation. I will speak about the work the World Bank Group is doing to help improve the conditions for SME competiveness and their integration into the global economy.

Haïti : de l’impact positif des échanges sur le redressement du pays et son essor économique

Calvin Djiofack Zebaze's picture

A busy Haitian market. Source - Glenda PowersL’horizon semble se dégager pour Haïti, qui poursuit son redressement depuis le séisme dévastateur de 2010. Et cela, grâce (en partie) au commerce extérieur.
 
Les autorités haïtiennes le savent qui s’emploient, avec le Groupe de la Banque mondiale et d'autres donateurs, à identifier les obstacles aux échanges pour les démanteler et doper ainsi les secteurs exportateurs.
 
Au début du mois, une équipe de la Banque mondiale s’est rendue à Port-au-Prince pour une semaine de travail avec les principaux acteurs, publics et privés, de la logistique commerciale du pays, notamment des représentants du ministère du Commerce et de l'Industrie. L’objectif ? Discuter de solutions pour renforcer le programme de facilitation des échanges du pays, financé par un fonds fiduciaire multidonateurs conçu pour aider les pays en développement à renforcer leur potentiel économique et à lutter contre la pauvreté grâce au commerce.
 

How Trade Is Helping Haiti Recover and Grow its Economy

Calvin Djiofack Zebaze's picture

 Sun rising behind clouds in Haiti. Source - Yinan ChenThings are looking up in Haiti as the country continues to rebuild from the devastating 2010 earthquake. And part of this progress is a story of trade.

The Haitian government recognizes this, and is working with the World Bank Group and other donors to identify and remove barriers to trade to better promote export growth.

A World Bank team traveled to Port au Prince earlier this month for a week long workshop with the main stakeholders (public and private) intervening on trade logistic in the country, including the Ministry of Commerce and Industry, in order to discuss ways to strengthen the Haitian Trade Facilitation (TF) program. The program is funded through the Trade Facilitation Facility, a multi-donor trust fund dedicated specifically to helping developing countries realize economic development and poverty reduction through trade.
 

A Step Toward Formalization: The Charter for Cross-Border Traders

Carmine Soprano's picture

Women carrying firewood to sell at a local market in Kaduna, Nigeria. Photo - ©IFPRI/Ian Masias.If you are woman in Sub-Saharan Africa and you live and work in a rural area, you are probably a trader. You are likely to be carrying a variety of goods across the border several times per day or week, and to rely on that as a major source of income to your household. You’re probably facing high duties, complex procedures, and corrupted officials at the border – the latter, in some cases, might want to harass you before they let you go through.  You may not be able to read or understand what duties apply to the goods you are trading. In this scenario, what is your incentive to go through the formal border post?

It’s probably easier, cheaper, and faster to cross the border informally.

Does Your Country Export What It Should?

Siddhesh Kaushik's picture

Customs reforms have made trade easier in Georgia. Photo - Irakli Tabagari / World Bank.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 an absolute 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.

Competitiveness is Key to Trade and Development in Africa

Anabel Gonzalez's picture
Textile factories are an important source of employment in Lesotho, which benefits from the AGOA agreement. Photo credit: John Hogg / World Bank. As World Bank President Jim Kim told the African leaders who gathered in Washington for the U.S.-Africa Leaders Summit this week: African countries have enormous potential to increase trade, drive growth, reduce poverty, and deliver jobs. They face constraints, to be sure, but the World Bank Group is working with our African partners daily to improve the competitiveness of their industries and boost the volume and diversity of their trade with the rest of the world.

At a high-level meeting at the World Bank on Monday, African ministers and delegations representing 51 countries had a pressing concern: the renewal and modernization of the African Growth and Opportunity Act (AGOA). A preferential program that enhances the access of qualifying African countries to the US market, the law is due to expire in September 2015.

What Will the Trade Facilitation Agreement Mean for the Aid for Trade Agenda? New e-Book Provides Answers

Jaime de Melo's picture

The world’s 45 Least Developed Countries that are not oil producers (non-oil LDCs) are exporting less and less in the global market place. Between 1985 and 2012, the world market share of non-oil LDCs’ exports of goods and services fell from 1.2 percent to 0.8 percent—all while their share in world population rose from 7.5 percent to 9.9 percent.

The 2005 Aid for Trade (AFT) initiative was designed to arrest this decline. Yet, LDCs’ trade costs continue to fall less rapidly than those of their competitors.

Clearly, it’s time to re-evaluate the AFT initiative.

A new e-book does just that, and, contrary to what some may think, concludes that the initiative has been beneficial. But due to a collective failure to clearly articulate its results, the achievements of the AFT initiative are now at risk as development budgets come under increasing pressure.

Notes From the Field: Customs Reform in Russia, a Sophisticated Client with a Long Border

Miles McKenna's picture

Editor's Note: "Notes From the Field" is an occasional feature where we let World Bank Group professionals conducting interesting trade-related projects around the globe explain some of the challenges and triumphs of their day-to-day work. The views expressed here are personal and should not be attributed to the World Bank Group. All interviews have been edited for clarity.

The interview below was conducted with Amit Mukherjee, a Lead Public Sector Specialist with the World Bank Group. Amit works in the WBG’s new Governance Global Practice, where much of his work centers on the Russian Federation. Amit was the project team leader for the recent Russian Federation Customs Development Project (CDP), which helped to reform and modernize the country's Federal Customs Service. Approved in 2003, the CDP wrapped up last year—with some impressive results. The Trade Post spoke with Amit about his experience in Russia, what makes reform in the country challenging, and where the two parties’ relationship can bring about positive outcomes in the future.

Sticky Feet: How Workers’ Reluctance to Move Can Reduce Gains from Trade

Elizabeth Ruppert Bulmer's picture

When economists think about price shocks, they consider how a change in price will affect the supply and demand of a product. But when that product is human – i.e., a worker – interpreting the impact of a price – or wage – shock is no longer cut and dried.

Just consider: If your wage was suddenly cut, would you remain in your current job despite the loss in earnings? Would you quit immediately, or look for a new job while continuing to work? How long could you survive on your lower earnings? Would you be forced to sell your house or other assets? How much money and effort would you invest in finding a better job? Would your personal circumstances allow you to take a better job in a distant location? Would you uproot your family for this job? 

Boosting Malaysia's Performance in the World Cup of Trade

Miles McKenna's picture
Trade issues can seem quite complex. Sometimes it's nice to boil concepts down to simpler terms-- terms more familiar, more beloved by many of us. So, let's talk futbol.

The latest Malaysia Economic Monitor reviews aome key developments in 2013, while also providing in-depth analysis of strutural trends in the country's trade competitiveness. But how competitive is Malaysia (or its trade) on the football pitch? Check out the video below to find out.
Malaysia's Trade (in Futbol Terms)

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