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.
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.
Trade facilitation is at the center of the global trade policy agenda. The Trade Facilitation Agreement (TFA) – signed by World Trade Organization (WTO) Members in December 2013 and discussed last week at the WTO’s Fifth Global Review of Aid for Trade – aims to simplify and harmonize trade procedures across countries. Improving their ability to efficiently manage trade flows is a challenging task for many developing countries, but developed countries are eager to help. The WTO indicates that between 2006 and 2011, US $1.2 billion in official development aid was spent to support trade facilitation reforms. Even more aid was committed as a result of the TFA.
As of yet we know little about the impacts of trade facilitation efforts. Djankov, Freund, and Pham (2006), Freund and Rocha (2010), Persson (2010) and Hornok and Koren (2014) provide cross-sectional evidence on the trade impacts of administrative costs and delays. But trade facilitation reforms have seen few rigorous impact evaluations.
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.
In December 2013, Members of the World Trade Organization (WTO) concluded negotiations on a Trade Facilitation Agreement (TFA) which promises to significantly improve trade facilitation practices across the world. Yet, to date, only five WTO members — Hong Kong (China), Singapore, the United States, Mauritius, and Malaysia – have formally lodged their acceptance of the TFA. Two-thirds of the WTO’s 161 Members still need to do so before the Agreement can enter into force.
The pressure is on for Member countries to ratify the Agreement and begin to reap the benefits of its implementation, which are expected to be quite substantial. A conservative calculation puts global trade cost savings resulting from the full implementation of the Trade Facilitation Agreement (TFA) at around $210 billion per year.
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With over 30 million Africans living outside of their home countries, the continent’s diaspora has the potential to be a major source of development financing. The financial power of the diaspora shows in the high remittance figures that Africa receives annually from its foreign-based communities. In 2010, estimates reached a record US$ 40 billion, or 2.6% of the continent’s GDP, not counting informal money transfers. Further, the diaspora saves an estimated US$ 53 billion annually.
Which regions trade more amongst themselves? What are the top products being exported or imported? Who are the top exporting and importing countries in a particular region?
Here is a visual representation of regional trade in South Asia in WITS that can help quickly unpack some of these questions as they relate to the region.
After the jump, we break down these numbers and show how you can explore the viz.
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.