WORLD BANK GROUP WORLD BANK GROUP TRADE STRATEGYTRADE STRATEGY
MombertMombert Hoppe, Economist, World Bank Geneva Hoppe, Economist, World Bank Geneva OfficeOfficeBern, February 22, 2012Bern, February 22, 2012
Why a Trade Strategy?1
This is the first WBG Trade StrategyTo date activities guided by a 2001 Development Committee paper; Board papers; a 2006 review by the Independent Evaluation Group and results of the Bank’s research programFocus in 1980s and 1990s primarily on trade incentive framework created by tariffs and other “at the border” policies (“effective rate of protection”) and (real) exchange rate (“anti-export bias”)
The Trade Agenda has Changed2
Globalization has led to deep inter-linkages among countries and increased vulnerability to shocksDeveloping countries are new drivers of global trade (“multi-polarity”)Tariffs often no longer a binding constraint to tradeTrade increasingly involves global value chains and intra-firm transactions → FDI-trade-labor market/skills linkagesHigher demand for natural resources/commodities and potential for services trade offer new opportunities to developing countries – but also
Trade/GDP and South-South trade3
Trend decoupling—starting in early 90s
‐4
‐2
0
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4
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10
1965
1967
1969
1971
1973
1975
1977
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1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
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2009
2011
High IncomeHigh Income TrendDeveloping CountriesDeveloping Countries Trend
World Growth 1965 ‐ 2011
• Sustained high growth levels associated with expanding trade• World trade has grown twice as fast as global GDP
Services trade: expanding, but big differences across developing countries5
Drivers: Trade Liberalization6
010
2030
4050
Tarif
fs(%
)
0 2000 4000 6000 8000GDP per capita(US dollars)
1980s 1990s2000s
MFN Applied Tariff Rates versus GDP per Capita
Source: Mattoo and Neagu, 2011
Drivers: Lower transaction costs (NTMsand trade costs); now relatively more important7
40‐50% range
Shepherd, 2010
Drivers: Technology (FDI, ICT, global supply chains)
8
Vertical specialization as a share of exports: 33% for Developing Countries in 2005
Source: Canuto, Dutz, and Reis (2010)
Regionalism: spaghetti, noodles, etc.
9
Source: Chauffour and Maur, Preferential Trade Agreement Policies for Development, 2011
Trade Openness: Volatility & Risk of Shocks
10
Implication: A More Complex Trade Agenda
11
Competition is fiercer—more opportunities but also faster displacement of firms/farms/workersMany countries still highly dependent on a few exports: diversification critical for sustaining higher growthMany constraints to international trade and supply chains lie “behind-the-border” – logistics, trade finance, servicesNeed to manage shocks—and limit volatility A multi-dimensional agenda that extends well beyond the remit of Trade Ministries
Strategy informed by consultations:12
Four priority areas 13
Competitiveness/diversification:(better) jobs, including in supplier firms; “self-insurance” against volatility
Facilitation/logistics(Fixed) trade costs/access to (trade) finance more detrimental for SMEs/poor households/remote producers
Trade cooperationCoherence – negative impacts of globally distorting policiesMarket access and market entryRegional market opportunities for smaller firms, farmers
Volatility and inclusionPoor have less capacity to deal with shocks; many do not have opportunity to benefit from trade (“connectivity”)
Relevance to poverty-reduction14
Overarching principles15
Improve coordination, both internal & externalCoordination failures from multi-sectoral dimension of trade
Focus on sources of comparative advantageCountry presence; economy-wide focus; cross-sectoralexpertise; financing capacity and flexibility (investment lending; budget support)
Leverage/build stronger partnershipsRecognize many other sources of trade assistance
Strengthen monitoring and evaluationData to better monitor and evaluate programs and impactKnowledge to ensure informed policy decisions are made (research analysis)
Trade Competitiveness and Diversification
16
Export diversification, 1991-2006:Intensive margin (more markets) dominates17
1-year firm survival rates < 50%18
Support to address specific constraints:Asparagus in Peru19
Services input costs/quality: enhancing competition
Trade Facilitation/Logistics & Finance
(and trade-related infrastructure)
21
Africa’s Regional Power Network22
Source: Africa’s Infrastructure: An Agenda for Transformative Action, World Bank, African Development Bank, African Union, 2010
Africa’s Regional Transport Network
23
Source: Africa’s Infrastructure: An Agenda for Transformative Action, World Bank, African Development Bank, African Union, Sept. 2010
“Software”: Trade facilitation-related costs
24
Documents to export (number)
Time to export (days)
Cost to export (US$ per container)
OECD 4.4 10.9 1,058.70 East Asia & Pacific 6.4 22.7 889.8 Eastern Europe & Central Asia 6.4 26.7 1,651.70 Latin America & Caribbean 6.6 18 1,228.30
South Asia 8.5 32.3 1,511.60 Middle East & North Africa 6.4 20.4 1,048.90 Sub-Saharan Africa 7.7 32.3 1,961.50
Fragile states and logistics performance
25
Trade Cooperation (multilateral; regional)
26
Global level: Analysis and advocacy of pro-development policies and “win-win” multilateral cooperation
Examples: DFQF market access in G-20, trade impacts of agricultural and climate-change-related policies; access to natural resources (export restrictions); trade as part of solution to collective action problems (e.g., food)WTO; Doha; (NB: Doha ≠ WTO!); multilateralizingregionalism
Regional cooperation: design and implementation of agreements
NTMs; Integrating services markets; Regulatory reformsInfrastructure
Global and regional trade cooperation
27
Greater inclusion; managing shocks
28
29
2010-11 global food price surge
Wheat, maize, many other commoditiesUsed detailed data on the extent of pass-through into domestic pricesData on 28 countries & 38 commoditiesEstimate that 44 million have been pushed below the $1.25/day poverty line
68 million entering poverty; 24m escaping
Poverty impacts by country, % pt
Source: Ivanic, Martin and Zaman, “Short run impacts of the 2010-11 food price surge on poverty” WB Policy Research Working Paper 5633
Implementation of the Trade Strategy
31
Three main instruments:LendingTechnical assistance, knowledge and policy dialoguePartnerships
ViaRegion-specific work
programs and activities by central units units
Trade in World Bank Country Assistance Strategies
32
More than two-thirds of CAS include trade in their operational programs.
CAS increasingly emphasize trade facilitation & the behind-the-border agenda
Lending: WBG is the Largest Provider of Aid for Trade
33
World Bank trade-related lending is greatest for Africa
WBG Trade Lending Grew in FY09-10
Stronger focus on “behind-the-border” issuesInclude more ‘software’ (policy/regulatory reform) in transport and trade facilitation projectsMore targeted interventions in competitiveness projects/loans to support diversification, moves up value chainIncreased focus on projects/support for regional integration/cooperation
Including regional Development Policy Operations
Proposed changes in emphasis in lending
34
1. Cross-country and cross-industry trade and policy indicators (Trading Across Borders, LPI, Services Policy Restrictiveness Database)
2. Technical assistance for statistics (STATCAP)3. Software platforms and diagnostic toolkits (TTFAs,
DTIS, WITS/McMAPS, TRIST)4. Policy dialogue and project
identification/design/development5. Research and analysis
Implications of changing patterns of international integrationImpact evaluation and policy assessments (NTMs, services, etc.)Greater focus on a “wholesale” model: work with research institutes in developing countries; invest in
Operational knowledge, technical assistance and research
35
1. Supporting clients through new knowledge platforms that include a wide variety of external partners
Mechanism to collect, analyze, and diffuse knowledge/good practices on services regulation/reform within/across Regions
2. Cooperation with specialized organizations in the provision of technical assistance
“Annex D” agencies on Trade Facilitation3. Collaboration to provide global public goods such as
datasets; support for multilateral trading systemTransparency in Trade (TnT) data initiative (AfDB, ITC, UNCTAD) WITS/McMAPS
4. Agreements re: specific areas of expertise and collaboration
E.g.: AfDB—monitoring implementation of PTAs; IMF/WCO: technical assistance in the customs/revenue area
Partnerships as implementation instruments
36
Partners/partnerships37
International organizationsRDBs, WTO, ITC, UNCTAD, IMF, WCO, OECD, etc.
Global initiativesEnhanced Integrated Framework
Private sector (data; public goods)Global Facilitation Partnership (freight forwarders; logistics and express industries)Private sector aid for trade—e.g., software for Customs
Development partners (donor community)CSOs and national/regional policy research
Better Internal Coordination38
Trade is multi-sectoralInfrastructure; finance & private sector development; IFC, MIGA, agriculture, transport, etc.
Cross-cutting issues such as managing trade shocks, food prices, and climate change require coordination (social safety nets; environmental policies/programs)Address overlaps that can lead to uncoordinated views/policy advice across the Bank Group and missed opportunities for synergies/complementaritiesCountry teams and clients may be unaware where
ti i t / t b ht
Three New Internal Coordination Mechanisms
39
Better Coordination within the Bank
40 A Bank Group-wide Trade Council
Results Focused41
Indicators of global progressFirms’ ability to access international markets; diversification; market reach; export survival; services
Outcomes / impacts in client countriesResults in the main priority areas identified by the Strategy
Results by WBGOrganizational changes aimed at implementation of the StrategyMeasures relating to knowledge generation, dissemination and useMeasures that concern quality of TA and lending/credits
http://www.worldbank.org/tradestrategy
Thank you
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