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Trade

When China met Africa

Tehmina S. Khan's picture
China’s expanding presence in Sub-Saharan Africa has been a major catalyst for growth in the region. Contrary to widespread opinion, its engagement covers all aspects of development. Stronger domestic policies will help countries in the region increase the gains from this growing partnership.

Commodities (mostly) continue to tumble

John Baffes's picture

We just published our Commodity Market Outlook for the third quarter of 2015, and report that most prices declined in the second quarter of 2015 due to ample supplies and weak demand, especially in industrial commodities (see figure below).
 

 
Energy prices rose 12 percent in the quarter, with the surge in oil offset by declines in natural gas (down 13 percent) and coal prices (down 4 percent). However, energy prices fell on average to 39 percent below 2014 levels. Natural gas prices are projected to decline across all three main markets—U.S., Europe, and Asia—and coal prices to fall 17 percent. Excluding energy, our report notes a 2 percent decline in prices for the quarter, and forecasts that non-energy prices will average 12 percent below 2014 levels this year. Iran’s new nuclear agreement with the US and other leading governments, if ratified, will ease sanctions, including restrictions on oil exports from the Islamic Republic of Iran. Downside risks to the forecast include higher-than-expected non-OPEC production (supported by falling production costs) and continuing gains in OPEC output. Possible (less likely) upside pressures may come from closure of high-cost operations—the number of operational oil rigs in the US is down 60 percent since its November high, for example—and geopolitical tensions. 

Rise of informality in the tradable sector-- evidence from India

Ejaz Ghani's picture
The slow growth of Indian manufacturing is a concern for many observers of the Indian economy, and India’s manufacturers have long performed below their potential. Although the country’s manufacturing exports are growing, its manufacturing sector generates just 16% of India’s Gross Domestic Product (GDP), much less than the 55% from services. Since its liberalization, India has undertaken many trade reforms to increase its global integration, and the country has invested in domestic infrastructure projects to improve its regional connectivity.

Do fewer document requirements lead to faster export and import clearances?

Asif Islam's picture
At the outset, the relationship is rather straightforward: The more the number of documents needed to export or import, the longer the time it will take to clear the required procedures to trade. The policy recommendation that then follows is to reduce the time cost of trade by reducing the number of documents needed and thereby achieve trade facilitation. Correct? To an extent yes. However, further research shows that it is not always as straightforward as it seems.
 

​Are mega-trade agreements a threat to Brazil?

Otaviano Canuto's picture
The landscape of international trade negotiations has been undergoing an upheaval. On the multilateral level, after 15 years of unsuccessful attempts to close the Doha Development Round at the World Trade Organization (WTO), the negotiation system has shown to be highly vulnerable to blockades by any small group of member countries. The complex web of diverse individual country objectives, cutting across several interrelated themes, made reaching a deal harder than originally expected.

Fear of Flying (or Sailing)? Pricing International Aviation and Maritime Emissions

Jon Strand's picture

Note from Let's Talk Development Editors: Co-authors Michael Keen and Ian Parry were not mentioned in an earlier version of this blog post, this has been corrected.

The central focus of climate talks that concluded last year in Lima has been on building wide agreements to restrict national emissions of greenhouse gases. But some important emissions are hard to allocate to individual nations: Those from international aviation and shipping. These currently constitute about 4% (and rising) of global carbon emissions, and are subject to almost no charges. This current state reflects heavy resistance to such charges, from industry and many governments, but also tax competition: Taxing these sectors by any one country can be hard due to their geographic mobility and international nature. 

Dutch disease: It’s not just the oil; it’s the oil barons

Harun Onder's picture

What would you do if you won a billion dollars? Would you just buy more hamburgers for lunch or pick up some extra pairs of socks? Probably not. You would think bigger: maybe a boat, a mansion, a fancy car – luxury goods. Or you might try to make your life easier with a housekeeper, a driver, a chef – luxury services. This switch in the shopping list is so common that economists have a nerdy name for it: “non-homothetic” preferences. That is, people buy different things when they get more money. 

It turns out that this dynamic is relevant for development, as we (Bill Battaile, Richard Chisik, and Harun Onder) found in “Services, Inequality, and the Dutch Disease,” a World Bank Policy Research Working Paper published this year. In particular, countries that see a rapid influx of income following a natural resource discovery – say oil or diamonds – are vulnerable to this pattern in a way that could hinder their overall chances of economic growth.

Who will feed China in the 21st Century?

Will Martin's picture

A recent surge in China’s food imports has rekindled concerns about global food demand raised by Brown (1995) and about food self-sufficiency in China. According to UN Comtrade data, China’s trade in food was roughly balanced until 2008 but subsequently moved into deficit, with net imports rising to $38.7 billion in 2013. A key question is whether China will become a massive net food importer like Japan and the Republic of Korea, which rely on world markets for more than 70 percent of grain and soybean demand.
 
China’s rapid economic growth, at 8.5 percent average annual per capita in purchasing power parity terms since economic reform began in 1978, has dramatically changed Chinese diets. While China’s per capita calorie consumption appears likely to be approaching its peak, the composition of food demand seems likely to continue to change, as consumers shift away from basic staples and towards animal-based products. This shift to greater dietary diversity imposes greater burdens on agricultural resources since animal-based diets require much more agricultural resources than vegetable-based diets.

What Can We Say About Imported Intermediate Inputs and their Barriers?

Asif Islam's picture

A substantial literature exists that argues for the alleviation of barriers to imports in general. However, more recently the spotlight has been on the imports of intermediate inputs. The potential benefits from such imports include not just cheaper inputs based on the principle of comparative advantage of fixed costs in production, but also greater adoption of technologies embedded in foreign inputs and potential complementarities between foreign and domestic inputs. The suggested far-reaching rewards in alleviating import restrictions on intermediate inputs include greater private sector development and an eventual increase in economic growth.  However, far less has been established regarding the relationship between such imports and their barriers. Can a negative relationship be ascertained, and what is the magnitude of such a relationship?

Services, Inequality, and the Dutch Disease

LTD Editors's picture

A new World Bank policy research working paper by Bill Battaile, Richard Chisik, and Harun Onder shows how Dutch disease effects may arise solely from a shift in demand following a natural resource discovery. The natural resource wealth increases the demand for non-tradable luxury services due to non-homothetic preferences. Labor that could be used to develop other non-resource tradable sectors is pulled into these service sectors. As a result, manufactures and other tradable goods are more likely to be imported, and learning and productivity improvements accrue to the foreign exporters.

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