|
on International Trade |
| By: | Warren H. Hausman (Stanford University); Hau L. Lee (Stanford University); Uma Subramanian (The World Bank) |
| Abstract: | Past research into the determinants of international trade highlighted the importance of the basic spatial gravity model augmented by additional variables representing sources of friction. Studies modeled many sources of friction using various proxies, including indices based on expert judgment in some cases. This paper focuses on logistics friction and draws on a data set recently compiled by the World Bank with specific quantitative metrics of logistics performance in terms of time, cost, and variability in time. It finds that the new variables that relate directly to logistics performance have a statistically significant relationship with the level of bilateral trade. It also finds that a single logistics index can capture virtually all of the explanatory power of multiple logistics indicators. The findings should spur public and private agencies that have direct or indirect power over logistics performance to focus attention on reducing sources of friction so as to improve their country's ability to compete in today's global economy. Moreover, since the logistics metrics are directly related to operational performance, countries can use these metrics to target actions to improve logistics and monitor their progress. |
| Keywords: | ??? |
| Date: | 2005–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3773&r=int |
| By: | Chad P. Bown (Brandeis University) |
| Abstract: | This paper describes a newly collected, detailed database on national governments' use of the antidumping trade policy instrument. The data collection project was funded by the Development Research Group of the World Bank and Brandeis University. While still preliminary, it goes beyond existing, publicly-used sets of antidumping data in a number of fundamental ways. It is a first attempt to use original source national government documentation to organize information on products, firms, the investigative procedure and outcomes of the historical use (since the 1980s) of the antidumping policy instrument across large importing country users. The paper also reports more and recent data on a number of smaller users of antidumping, as well as some limited information on the use of countervailing measures from national governments that are users of countervailing duty laws. |
| Keywords: | International economics, Public sector management |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3737&r=int |
| By: | Guido G. Porto (The World Bank) |
| Abstract: | This paper explores an empirical methodology to assess the impacts of trade reforms on household behavior in developing countries. It focuses on consumption and income responses: when price reforms take place, households modify consumption and production decisions and local labor markets adjust. The paper proposes a joint estimator of demand and wage price elasticities from survey data. The method uses an empirical model of demand to extract price information from unit values, and uses this information to estimate the response of households to price reforms. By correcting unit values for quality effects and measurement error, the method overcomes the problem of the endogeneity of unit values. By endogeneizing household income, the model corrects potential biases in the estimation of own- and cross-price elasticities in consumption. The paper applies the method to an expenditure and income survey for rural Mexico. It shows that the corrections suggested in this paper are empirically important. In particular, it shows that allowing for consumption and income responses is a key element of an accurate empirical assessment of trade policy. |
| Keywords: | Agriculture, Poverty, International economics |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3695&r=int |
| By: | Bernard Hoekman (Institut d'Etudes Politiques, Paris); L. Alan Winters (The World Bank) |
| Abstract: | The substantial literature investigating the links between trade, trade policy, and labor market outcomes-both returns to labor and employment-has generated a number of stylized facts, but many open questions remain. This paper surveys the subset of the literature focusing on trade policy and integration into the world economy. Although in the longer run trade opportunities can have a major impact in creating more productive and higher paying jobs, this literature tends to take employment as given. A common finding is that much of the shorter run impacts of trade and reforms involve reallocation of labor or wage impacts within sectors. This reflects a pattern of expansion of more productive firms-especially export-oriented or suppliers to exporters-and contraction and adjustment of less productive enterprises in sectors that become subject to greater import competition. Wage responses to trade and trade reforms are generally greater than employment impacts, but trade can only explain a small fraction of the general increase in wage inequality observed in both industrial and developing countries in recent decades. A feature of the literature survey is that the focus is almost exclusively on industries producing goods. Given the importance of service industries as a source of employment and determinants of competitiveness, the paper argues that one priority area for future research is to study the employment effects of services trade and investment reforms. |
| Keywords: | International economics, Labor and employment |
| Date: | 2005–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3676&r=int |
| By: | Joseph François (Tinbergen Institute (Rotterdam) and CEPR); Bernard Hoekman (The World Bank, Institut d'Etudes Politiques, Paris and CEPR); Miriam Manchin (Tinbergen Institute (Rotterdam)) |
| Abstract: | Because of concern that OECD tariff reductions will translate into worsening export performance for the least developed countries, trade preferences have proven a stumbling block to developing country support for multilateral liberalization. The authors examine the actual scope for preference erosion, including an econometric assessment of the actual utilization and the scope for erosion estimated by modeling full elimination of OECD tariffs, and hence full most-favored-nation liberalization-based preference erosion. Preferences are underutilized due to administrative burden-estimated to be at least 4 percent on average-reducing the magnitude of erosion costs significantly. For those products where preferences are used (are of value), the primary negative impact follows from erosion of EU preferences. This suggests the erosion problem is primarily bilateral rather than a WTO-based concern. |
| Keywords: | International economics |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3730&r=int |
| By: | Kym Anderson (The World Bank); William J. Martin (The World Bank); Dominique van der Mensbrugghe (The World Bank) |
| Abstract: | The authors provide estimates of the impact that removing all merchandise trade distortions (including agricultural subsidies) would have on food and agricultural production, trade, and incomes. Using the latest versions of the Global Trade Analysis Project (GTAP) database and the World Bank's LINKAGE model of the global economy (projected to 2015), their results suggest farm employment, the real value of agricultural output and exports, the real returns to farm land and unskilled labor, and real net farm incomes would all rise substantially in developing country regions with a move to free merchandise trade, thereby alleviating rural poverty-despite the decline in international terms of trade for developing countries that are net food importers or are enjoying preferential access to agricultural markets of high-income countries. |
| Keywords: | Agriculture, Poverty, Rural development, International economics |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3736&r=int |
| By: | Marijke Kuiper (Agricultural Economics Research Institute (LEI) Wageningen UR); Frank van Tongeren (Agricultural Economics Research Institute (LEI) Wageningen UR) |
| Abstract: | Most studies of the opening of the Chinese economy focus at the national level. The few existing disaggregated analyses are limited to analyzing changes in agricultural production. The authors use an innovative village equilibrium model that accounts for nonseparability of household production and consumption decisions. This allows them to analyze the impact of trade liberalization on household production, consumption, and off-farm employment, as well as the interactions among these three aspects of household decisions. They use the village model to analyze the impact of price changes and labor demand, the two major pathways through which international trade affects households. Analyzing the impact of trade liberalization for one village in the Jiangxi province of China, the authors find changes in relative prices and outside village employment to have opposite impacts on household decisions. At the household level the impact of price changes dominates the employment impacts. Comparing full trade liberalization and the more limited Doha scenario, reactions are more modest in the latter case for most households, but the response is nonlinear to increasing depth of trade reforms. This is explained by household-specific transaction (shadow) prices in combination with endogenous choices to participate in the output markets. Rising income inequalities are a growing concern in China. Whether trade liberalization allows incomes to grow together or to grow apart depends on whether one accounts for the reduction in consumption demand when household members migrate. Assessing the net effect on the within-village income distribution, the authors find that poorer households that own draught power gain most from trade liberalization. The households that have to rely on the use of own labor for farm activities and are not endowed with traction power, nor with a link to employment opportunities in the prospering coastal regions, have fewer opportunities for adjustment. |
| Keywords: | Rural development, International economics |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3696&r=int |
| By: | Mary Amiti (International Monetary Fund and CEPR); Beata Smarzynska Javorcik (The World Bank and CEPR) |
| Abstract: | The authors examine the determinants of entry by foreign firms using information on 515 Chinese industries at the provincial level during 1998-2001. The analysis, rooted in the new economic geography, focuses on market and supplier access within and outside the province of entry, as well as production and trade costs. The results indicate that market and supplier access are the most important factors affecting foreign entry. Access to markets and suppliers in the province of entry matters more than access to the rest of China, which is consistent with market fragmentation due to underdeveloped transport infrastructure and informal trade barriers. |
| Keywords: | Infrastructure, Private sector development, Transition, International economics |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3564&r=int |
| By: | César Calderón (The World Bank); Norman Loayza (The World Bank); Klaus Schmidt-Hebbel (Central Bank of Chile) |
| Abstract: | External exposure can be measured by the sensitivity of first and second moments of economic growth to openness and foreign shocks. This paper provides an empirical evaluation of external exposure using panel data methods for a worldwide sample of countries. Controlling for domestic conditions, the paper examines the growth and volatility effects of outcome measures of trade and financial integration, as well as four types of foreign shocks: terms of trade changes, trading partners' growth rates, international real interest rate changes, and net regional capital inflows. The paper analyzes the possibility of nonlinearities by allowing the growth and volatility effects of openness to vary with the general level of economic development and by letting the effects of foreign shocks depend on the degree of trade and financial integration. The findings point toward strong non-monotonic effects of openness and external shocks on growth and volatility. Moreover, all in all, the results contradict the view that international integration increases external vulnerability by hurting growth and increasing volatility or by amplifying the adverse effect of external shocks. |
| Keywords: | International economics |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3733&r=int |
| By: | Joseph F. Francois (Tinbergen Institute (Rotterdam) and CEPR); Hugo Rojas-Romagosa (Tinbergen Institute (Rotterdam)) |
| Abstract: | The authors analyze general equilibrium relationships between trade policy and the household distribution of income, decomposing social welfare into real income level and variance components and emphasizing Gini and Atkinson indexes. They embed these inequality-adjusted social welfare functions in a general equilibrium structure mapping from tariff protection to household inequality. This yields predictions regarding the linkages between trade protection, country characteristics, and inequality within a broad general equilibrium framework. In addition, the authors can separate the efficiency and equity effects of tariffs on welfare. They then examine endogenous tariff formation when policymakers care about both equity and special interests. |
| Keywords: | Poverty, International economics |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3731&r=int |
| By: | David G. Tarr (The World Bank); Giorgio Barba Navaretti (University of Milan) |
| Abstract: | This paper is the introduction and summary chapter of the 43 chapter volume entitled Handbook of Trade Policy and WTO Accession for Development in Russia and the CIS. The key policy conclusions of each of the chapters are highlighted in this paper. The Handbook will be published only in Russian in 2005, but an English language version of the majority of the papers described here is available on the website www.worldbank.org/trade/russia-wto. This paper first explains the potential importance of World Trade Organization (WTO) accession as a development tool, and discusses the recent successful development models and the role of trade policy in their development. The paper then summarizes the three parts of the Handbook. The first part treats trade policy (with applications to Russia and the Commonwealth of Independent States [CIS]). The second part treats World Trade Organization institutions and disciplines, again with Russia and CIS applications. And the third part focuses on various aspects of the impact of WTO accession on Russia. The numerous papers that relate trade policy and WTO accession to experience in Russia and the CIS are likely to be of special interest to native English speakers, since these papers are new to the literature. The papers in the Handbook are intended to be non-technical materials accessible to a wide policy audience. The Handbook forms the basis of a World Bank Institute course on trade policy and WTO accession, which has been delivered and will be delivered again on multiple occasions. |
| Keywords: | International economics |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3726&r=int |
| By: | Branko Milanovic (The World Bank Research Department); Lyn Squire (The World Bank Research Department) |
| Abstract: | The objective of the paper is to answer an often asked question: If tariff rates are reduced, what will happen to wage inequality? The authors consider two types of wage inequality: between occupations (skills premium) and between industries. They use two large databases of wage inequality that have recently become available and a large data set of average tariff rates covering the period between 1980 and 2000. The authors find that tariff reduction is associated with higher inter-occupational and inter-industry inequality in poorer countries (those below the world median income) and the reverse in richer countries. However, the results for inter-occupational inequality must be treated with caution. |
| Keywords: | Labor and employment |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3571&r=int |
| By: | Thomas Rutherford (University of Colorado); David Tarr (The World Bank); Oleksandr Shepotylo (University of Maryland) |
| Abstract: | Taking price changes from the Global Trade Analysis Project (GTAP) model of world trade, the authors use a small open economy computable general equilibrium comparative static model of the Russian economy to assess the impact of global free trade and a successful completion of the Doha Agenda on the Russian economy, and especially on the poor. They compare those results with the impact of Russian accession to the World Trade Organization (WTO) on income distribution and the poor. The model incorporates all 55,000 households from the Russian Household Budget Survey as "real" households. Crucially, given the importance of foreign direct investment (FDI) liberalization as part of Russian WTO accession, the authors also include FDI and Dixit-Stiglitz endogenous productivity effects from liberalization of import barriers against goods and FDI in services. The authors estimate that Russian WTO accession in the medium run will result in gains averaged over all Russian households equal to 7.3 percent of Russian consumption (with a standard deviation of 2.2 percent of consumption), with virtually all households gaining. They find that global free trade would result in a weighted average gain to households in Russia of 0.2 percent of consumption, with a standard deviation of 0.2 percent of consumption, while a successful completion of the Doha Development Agenda would result in a weighted average gain to households of -0.3 percent of consumption (with a standard deviation of 0.2 percent of consumption). Russia, as a net food importer, loses from subsidy elimination, and the gains to Russia from tariff cuts in other countries are too small to offset these losses. The results strongly support the view that Russia's own liberalization is more important than improvements in market access as a result of reforms in tariffs or subsidies in the rest of the world. Foremost among the own reforms is liberalization of barriers against FDI in business services. |
| Keywords: | International economics |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3725&r=int |
| By: | Daniel Lederman (The World Bank); Caglar Ozden (The World Bank) |
| Abstract: | The United States imports around 25 percent of its merchandise under some form of preferential trade regime. The authors examine both the origins and consequences of U.S. trade preferences in the context of the gravity model of international trade. First, they provide estimates of the impact of preferential trade regimes in terms of access to U.S. markets while controlling for geo-strategic interests that determine the countries that are offered commercial preferences. Second, the authors consider not only country eligibility but also the extent of utilization of these programs. Third, they provide new estimates of the impact of transport and transactions costs beyond distance. In the standard gravity estimation, the authors find that beneficiaries of these preferences, except GSP, export 2-3 times more than the excluded countries, after controlling for country and product characteristics. Nonetheless, the estimated effects of these programs are lower when controlling for utilization ratios and selection biases due to the correlation between geopolitical interests and the standard explanatory variables used in the gravity model of trade, such as countries' geographic distance from the United States. |
| Keywords: | International economics |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3531&r=int |
| By: | Bernard Hoekman (Institut d'Etudes Politiques, Paris and The World Bank); Susan Prowse (Department for International Development, UK) |
| Abstract: | Trade preferences are a central issue in ongoing efforts to negotiate further multilateral trade liberalization. "Less preferred" countries are increasingly concerned about the discrimination they confront, while "more preferred" developing countries worry that WTO-based liberalization of trade will erode the value of current preferential access regimes. This tension suggests there is a political economy case for preference-granting countries to explicitly address erosion fears. The authors argue that the appropriate instrument for this is development assistance. The alternative of addressing erosion concerns through the trading system will generate additional discrimination and trade distortions, rather than moving the WTO toward a more liberal, non-discriminatory regime. They further argue that prospective losses generated by most-favored-nation liberalization should be quantified on a bilateral basis, using methods that estimate what the associated transfer should have been and ignoring the various factors that reduce their value in practice (such as compliance costs or the fact that part of the rents created by preference programs accrue to importers in OECD countries). Given that many poor countries have not been able to benefit much from preference programs, a case is also made that preference erosion should be considered as part of a broader response by OECD countries to calls to make the trading system more supportive of economic development. The focus should be on identifying actions and policy measures that will improve the ability of developing countries to use trade for development. |
| Keywords: | International economics |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3721&r=int |
| By: | Nathan M Jensen (Washington University) |
| Abstract: | Thanks to Nitsan Chorev, Robert Connolly, David Leblang, Quan Li, Andy Mertha, Layna Mosley, Bumba Mukherjee, Eric Reinhardt, Peter Rosendorff, Matthew Slaughter, Andy Sobel, participants of the 2004 Midwest Political Science Association annual meeting and the 2004 Duke Summer Institute on Globalization and Equity for comments and suggestions. Funding for data collection and interviews with WTO legal affairs staff was provided by the Weidenbaum Center on the Economy, Government, and Public Policy at Washington University and other financial support by the UCLA International Institute. |
| Keywords: | World Trade Organization, Tariffs, Trade, Steel, Protectionism |
| JEL: | F1 F2 |
| Date: | 2005–12–09 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpit:0512008&r=int |
| By: | Inessa Love (The World Bank); Lorenzo A. Preve (IAE Universidad Austral); Virginia Sarria-Allende (IAE Universidad Austral) |
| Abstract: | The authors study the effect of financial crises on trade credit in a sample of 890 firms in six emerging economies. They find that although provision of trade credit increases right after the crisis, it consequently collapses in the following months and years. The authors observe that firms with weaker financial position (for example, high pre-crisis level of short-term debt and low cash stocks and cash flows) are more likely to reduce trade credit provided to their customers. This suggests that the decline in aggregate credit provision is driven by the reduction in the supply of trade credit, which follows the bank credit crunch. The results are consistent with the "redistribution view" of trade credit provision, in which bank credit is redistributed by way of trade credit by the firms with stronger financial position to the firms with weaker financial stand. |
| Keywords: | Domestic finance, Private sector development |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3716&r=int |
| By: | Keith E. Maskus (University of Colorado at Boulder); Tsunehiro Otsuki (Osaka University); John S. Wilson (The World Bank) |
| Abstract: | Standards and technical regulations exist to protect consumer safety or to achieve other goals, such as ensuring the interoperability of telecommunications systems, for example. Standards and technical regulations can, however, raise substantially both start-up and production costs for firms. Maskus, Otsuki, and Wilson develop econometric models to provide the first estimates of the incremental production costs for firms in developing nations in conforming to standards imposed by major importing countries. They use firm-level data generated from 16 developing countries in the World Bank Technical Barriers to Trade (TBT) Survey Database. Their findings indicate that standards do increase short-run production costs by requiring additional inputs of labor and capital. A 1 percent increase in investment to meet compliance costs in importing countries raises variable production costs by between 0.06 and 0.13 percent, a statistically significant increase. The authors also find that the fixed costs of compliance are nontrivial-approximately $425,000 per firm, or about 4.7 percent of value added on average. The results may be interpreted as one indication of the extent to which standards and technical regulations might constitute barriers to trade. While the relative impact on costs of compliance is relatively small, these costs can be decisive factors driving export success for companies. In this context, there is scope for considering that the costs associated with more limited exports to countries with import regulations may not conform to World Trade Organization rules encouraging harmonization of regulations to international standards, for example. Policy solutions then might be sought by identifying the extent to which subsidies or public support programs are needed to offset the cost disadvantage that arises from nonharmonized technical regulations. |
| Keywords: | Industry, Private sector development, International economics |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3590&r=int |
| By: | Caesar B Cororaton (International Food Policy Research Institute); John Cockburn (Laval University); Erwin Corong (De La Salle University) |
| Abstract: | Since the early 1980s the Philippines has undertaken substantial trade reform. The current Doha Round of World Trade Organization (WTO) negotiations is now likely to bring further reform and shocks to world import prices and export demand. The impact of all these developments on the poor is not very clear and is the subject of intense debate. The authors use a detailed economywide computable general equilibrium (CGE) model to run a series of policy experiments. They find that poverty increases slightly with the implementation of the prospective Doha scenario. These effects are focused primarily among rural households in the wake of falling world prices and demand for the Philippines' agricultural exports. The authors find that the impacts of full liberalization-involving free world trade and complete domestic liberalization-depend strongly on the mechanism the government adopts to offset forgone tariff revenue. If an indirect tax is used, the incidence of poverty falls marginally, but the depth (poverty gap) and severity (squared poverty gap) increase substantially. If, instead, an income tax is used, all measures of poverty increase. In both cases, full liberalization favors urban households, as exports, which are primarily nonagricultural, expand. In separate simulations, the authors discover that free world trade is poverty reducing and favors rural households, whereas domestic liberalization is poverty increasing and favors urban households. Under free world trade, rural households benefit from increasing world agricultural demand. The anti-rural bias of domestic liberalization stems from the fact that import prices fall more for agricultural goods than for industrial goods, as initial import-weighted average tariff rates are higher for the former. In conclusion, the current Doha agreement appears likely to slightly increase poverty, especially in rural areas and among the unemployed, self-employed, and rural low-educated. The Philippines is found to have an interest in pushing for more ambitious world trade liberalization, as free world trade holds out promise for reducing poverty. |
| Keywords: | Poverty, International economics |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3738&r=int |
| By: | Christian Arnault Emini (CEREG (University of Yaoundé II, Cameroon) and CIRPEE (Université Laval, Quebec, Canada)); John Cockburn (CIRPEE (Université Laval, Québec, Canada) Author Name: Bernard Decaluwé; CIRPEE (Université Laval, Québec, Canada)) |
| Abstract: | The authors aim to assess the possible impacts of the Doha Round of negotiations on poverty in Cameroon. During the recent period of economic recovery, Cameroon enjoyed a sharp decline in poverty, with the headcount index falling from 53.3 percent of inhabitants in 1996 to 40.2 percent in 2001, mostly due to economic growth rather than redistribution. Will the current trade negotiations under the Doha Round reinforce or curb this trend? They apply a computable general equilibrium (CGE) microsimulation model that involves 10,992 households in order to address this question. The authors find the Doha Round to be poverty-reducing for Cameroon. For the whole country, the estimate of the net number of people who are lifted out of poverty is 22,000 following this scenario. Further investigations indicate that more ambitious world trade liberalization leads to greater poverty alleviation at the national level, while Cameroon's domestic trade liberalization has adverse poverty and inequality impacts-despite giving rise to higher aggregate welfare. Under the Doha scenario, the cuts in Cameroon's tariffs are very small (the average tariff rate moves from 11.79 percent in the base run to merely 11.66 percent) so that world trade liberalization effects on prices more than offset the adverse own liberalization effects in this scenario. If the rest of the world and Cameroon full trade liberalizations are combined, the adverse impacts of own liberalization outweigh the favorable outcomes of the world trade liberalization. The results suggest furthermore that the choice of tax replacement instrument can have an important bias in poverty impacts: poverty gets worse in the country case study when using an imperfect value-added tax instead of a neutral replacement tax to compensate lost tariff revenue, and gets even worse when using a consumption tax. Key reasons here are the supplementary distortions which are nil in case of a neutral tax and greatest in the case of a consumption tax. In addition, accompanying measures should be considered to avoid poverty increases in the framework of Economic Partnership Agreements currently in negotiation between African, Caribbean, and Pacific (ACP) countries and the European Union, which propose a drastic dismantlement of ACP tariffs over the next few years. |
| Keywords: | Poverty, International economics |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3746&r=int |
| By: | Channing Arndt (Ministry of Planning and Development, Mozambique and Purdue University) |
| Abstract: | This paper considers the potential implications of the Doha Development Agenda, as well as other trade liberalization scenarios, for Mozambique. An applied general equilibrium model, which accounts for high marketing margins and home consumption in the Mozambique economy, is linked to results from the GTAP model of global trade. In addition, a microsimulation module is used to consider the subsequent implications of trade liberalization for poverty. The implications of trade liberalization, particularly the Doha scenarios, are found to be relatively small. Presuming that a more liberal trading regime will positively influence growth in Mozambique, an opportunity exists to put in place such a regime without imposing significant adjustment costs. |
| Keywords: | International economics |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3717&r=int |
| By: | Kym Anderson (The World Bank) |
| Abstract: | Economists have influenced the trade policy agenda for establishing multilateral trade rules, disciplines, and procedures, and for negotiating most-favored nation and preferential reductions in trade barriers and subsidies, in addition to affecting the agenda for unilateral policy reform. These roles are considered in turn, before focusing on the economists' contribution through quantifying the extent and effects of existing trade distortions and alternative reform initiatives. Many trade distortions remain, however, so the author looks at where trade economists' efforts in agenda-setting need to be focused in the years ahead. |
| Keywords: | International economics |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3560&r=int |
| By: | Kym Anderson (The World Bank); William J. Martin (The World Bank); Dominique van der Mensbrugghe (The World Bank) |
| Abstract: | The authors illustrate some of the potential consequences of the World Trade Organization's Doha Round of multilateral trade negotiations on incomes and poverty globally. Using the global LINKAGE model to generate changes in domestic and international prices that have a direct impact on factor incomes and consumer prices, they estimate the change in real income at the poverty line that would accompany various reform scenarios. When accompanied by additional information about the elasticity of poverty with respect to income, this provides an estimate of the change in poverty by country. Under most liberalization scenarios considered, unskilled wages rise more than average incomes, but the estimated impact on global poverty is modest, especially if developing countries are unwilling to undertake much reform. |
| Keywords: | Agriculture, Poverty, Rural development, International economics |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3735&r=int |
| By: | Fan Zhai (Asian Development Bank); Thomas Hertel (The World Bank and Purdue University) |
| Abstract: | The authors assess the implications of multilateral trade reforms for poverty in China. They do so by combining results from a global modeling exercise with a national CGE model that features disaggregated households in both the rural and urban sectors. They examine two trade reform scenarios: one involving global trade liberalization, and one involving possible Doha Development Agenda reforms. Using the World Bank's $2 a day poverty line, the authors find that multilateral trade reforms do in fact reduce poverty in China. The biggest reductions occur in the rural areas-largely as a result of higher prices for farm products. |
| Keywords: | Agriculture, Industry, Transition, Poverty, International economics, Labor and employment |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3702&r=int |
| By: | Kym Anderson (The World Bank); Will Martin (The World Bank) |
| Abstract: | Anderson and Martin examine the extent to which various regions, and the world as a whole, could gain from multilateral trade reform over the next decade. They use the World Bank's linkage model of the global economy to examine the impact first of current trade barriers and agricultural subsidies, and then of possible outcomes from the World Trade Organization's Doha round. The results suggest moving to free global merchandise trade would boost real incomes in Sub-Saharan Africa and Southeast Asia (and in Cairns Group countries) proportionately more than in other developing countries or high-income countries. Real returns to farm land and unskilled labor and real net farm incomes would rise substantially in those developing country regions, thereby alleviating poverty. A Doha partial liberalization could take the world some way toward those desirable outcomes, but more so the more agricultural subsidies are disciplined and applied tariffs are cut. |
| Keywords: | International economics |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3607&r=int |
| By: | Chor-ching Goh (The World Bank); Beata S. Javorcik (The World Bank) |
| Abstract: | The authors examine the impact of Poland's trade liberalization in 1994-2001 on the industry wage structure. The liberalization was undertaken in preparation for Poland's accession to the European Union and was more pronounced in industries with larger shares of unskilled labor. Their analysis indicates that a decrease in an industry tariff was associated with higher wages being earned by workers employed in the industry, controlling for worker characteristics and geographic variables. The result is robust to including year and industry fixed effects, controlling for industry-level exports, imports, concentration, stock of foreign direct investment, and capital accumulation. The finding is consistent with liberalization increasing competitive pressures, forcing firms to restructure and improve their productivity, which in turn translates into higher profits being shared with workers. It could also be potentially attributed to trade liberalization lowering the costs of imported inputs, which enhances firm profitability. The result holds when skilled workers are excluded from the sample, thus suggesting that reductions in trade barriers benefited the unskilled in terms of an increase in wages. |
| Keywords: | Transition, Poverty, International economics |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3552&r=int |
| By: | Deepak Shah (Gokhale Institute of Politics & Economics, B.M.C.C. Road, Deccan Gymkhana, Pune 411004, Maharashtra, India) |
| Abstract: | The opening up of the national economy to the international market in the era of liberalization has certainly boosted country’s trade in various livestock products. The successful GATT negotiations have provided India an opportunity to compete on a more equal footing in the global livestock trade. Nonetheless, the point that merits attention is how international prices of livestock products will react to free trade regime. Who will gain and who will lose from the possible outcome of trade liberalization is again central point of discussion. According to Baxi (1994), there would be an upward increase in the international prices of dairy products. The long term implications of this can be :(a) EC would lose markets to the US, New Zealand and Australia, (b) A significant rise in cheese export prices, (c) Effect on SMP and Butter prices would be marginal, and (d) The benefit to India through SMP exports would be gradual and modest. One of the arguments put forward by Baxi (1994) is that India will gain from the possible outcome of the changes as the EC will have to raise export prices by 15 per cent to adjust lower inward tariffs. On the whole, India needing a modest share in the world export market for various dairy products will be able to realize better prices in future. Nevertheless, such realization will be possible only when India produces and exports sufficient quantities of these valued products in the years to come. |
| Keywords: | Livestock Trade of India |
| JEL: | F1 F2 |
| Date: | 2005–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpit:0512006&r=int |
| By: | Ricardo Monge-González (Costa Rican High Technology Advisory Committee Foundation (CAATEC) and Universidad Latina de Costa Rica); Francisco Monge-Ariño (Costa Rican High Technology Advisory Committee Foundation (CAATEC) and Ohio State University) |
| Abstract: | This paper reviews the most important changes, both in the economy and in the legal and institutional framework, to deal with unfair trade practices that Costa Rica has experienced during its trade liberalization process. It also evaluates whether the sectors that as a result of such a process have been facing increased foreign competition, and may have attempted to use the World Trade Organization (WTO) rules adopted by Costa Rica as a protectionist instrument. Costa Rica's legal framework against unfair trade practices at the multilateral level emerged when the country adopted the WTO rules on antidumping policies and safeguard measures. That has been reinforced at the bilateral level through the subscription of free trade agreements with Central America, Mexico, the Dominican Republic, Chile, and Canada. So far, only six antidumping petitions and five safeguards have been received by the government. In reviewing these petitions, the government has paid particular attention to the impact of any action on the competitiveness of the domestic market and on the possibility that it would support modernization of the industry. Behind the political acceptance of this disciplined approach lies widespread recognition of the social as well as economic progress that liberalization has supported. |
| Keywords: | International economics |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3591&r=int |
| By: | Norbert Fiess (The World Bank) |
| Abstract: | In early January 2003, the United States and Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua launched official negotiations for the Central American Free Trade Agreement (CAFTA), a treaty that would expand NAFTA-style trade barrier reductions to Central America. With deeper trade integration between Central America and the United States, it is expected that there will be closer links in business cycles between Central American countries and the United States. The paper finds a relatively low degree of business cycle synchronization within Central America as well as between Central America and the United States. The business cycle synchronization is expected to increase only modestly with further trade expansion, making the coordination of macroeconomic policies within CAFTA somewhat less of a priority. |
| Keywords: | International economics, Macroeconomics and growth |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3584&r=int |
| By: | Jayanta Roy (Confederation of Indian Industry, India); Shweta Bagai (Confederation of Indian Industry, India) |
| Abstract: | Trade facilitation is the ability of countries to deliver goods and services on time at the lowest possible cost. It has emerged as an important issue in unilateral, bilateral, and multilateral trade liberalization. Most countries have embarked on heroic reforms aimed at reducing transaction costs of trade. Thus, among the four new Singapore issues, there was least resistance from World Trade Organization (WTO) member countries to include trade facilitation in the Doha Round discussions. However, all countries are not equally placed in initiating reforms in the complex areas of customs procedures, transport and port logistics, harmonization of standards, and simplification of procedures. Trade facilitation reforms require a large volume of technical assistance for national capacity building. To facilitate what these reforms entail and what can be learned from cross-country experiences, the EU and the World Bank organized two workshops in Dhaka (South Asian countries) and Shanghai (East Asian countries) in 2004. Jointly they succeeded in bringing together renowned experts from multilateral organizations, selected bilateral donor community, the private sector, ex civil servants, and scholars. The participants were largely drawn from the relevant government departments and chambers of commerce and industry. This paper summarizes the main presentations in the workshops. It also indicates the areas that need more focus in future events. The paper should serve as a reference document for national policymakers and for future seminars and workshops on trade facilitation. It has also linked the presentations to the ongoing research work on trade facilitation. |
| Keywords: | International economics |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3703&r=int |
| By: | Kishore Gawande (Bush School of Government, Texas A&M) |
| Abstract: | The author surveys the empirical literature on the political economy of agricultural protection. He uses a detailed data set of agricultural Political Action Committee (PAC) contributions over five U.S. congressional election cycles over the 1991-2000 period to investigate the relationship between lobbying spending and agricultural protection. A detailed graphical analysis of campaign contributions by the agricultural PACs indicates that although there are very many PACs, in most sectors the majority of contributions are made by very few PACs. Econometric analysis reveals that lobbying spending by agricultural PACs is positively associated with the use of nontariff barriers and specific tariffs by the United States. There is a strong association between the average U.S. tariff on goods that benefit from U.S. export subsidies and lobbying spending. And there is no association between agricultural protection and trade measures such as import penetration and the export-to-output ratio. |
| Keywords: | Agriculture, International economics |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3722&r=int |
| By: | Roberto Chang (Rutgers University); Linda Kaltani (American University); Norman Loayza (The World Bank) |
| Abstract: | The authors study how the effect of trade openness on economic growth depends on complementary reforms that help a country take advantage of international competition. This issue is illustrated with a simple Harris-Todaro model where output gains after trade liberalization depend on the degree of labor market flexibility. In that model, trade protection may ameliorate the problem of underemployment (and underproduction) in sectors affected by labor market distortions. Hence, trade liberalization unambiguously increases per capita income only when labor markets are sufficiently flexible. The authors then present some panel evidence on how the growth effect of openness depends on a variety of structural characteristics. For this purpose, they use a non-linear growth regression specification that interacts a proxy of trade openness with proxies of educational investment, financial depth, inflation stabilization, public infrastructure, governance, labor-market flexibility, ease of firm entry, and ease of firm exit. They find that the growth effects of openness are positive and economically significant if certain complementary reforms are undertaken. |
| Keywords: | International economics, Macroeconomics and growth |
| Date: | 2005–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3763&r=int |
| By: | Nuno Limão (University of Maryland and CEPR); Marcelo Olarreaga (The World Bank and CEPR) |
| Abstract: | The proliferation of preferential trade liberalization over the past 20 years has raised the question of whether it slows down multilateral trade liberalization. Recent theoretical and empirical evidence indicates this is the case even for unilateral preferences that industrial countries provide to small and poor countries but there is no estimate of the resulting welfare costs. To avoid this stumbling block effect the authors suggest replacing unilateral preferences by a fixed import subsidy. They argue that this scheme would reduce the drag of preferences on multilateral liberalization and generate a Pareto improvement. More important, the authors provide the first estimates of the welfare cost of preferential liberalization as a stumbling block to multilateral liberalization. By combining recent estimates of the stumbling block effect of preferences with data for 170 countries and over 5,000 products they calculate the welfare effects of the United States, European Union, and Japan switching from unilateral preferences to the developing countries to the import subsidy scheme. Even in a model with no dynamic gains to trade the authors find that the switch produces an annual net welfare gain for the 170 countries ($4,354 million) and for each group: the United States, European Union, and Japan ($2,934 million), the developing countries ($520 million), and the rest of the world ($900 million). |
| Keywords: | International economics |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3565&r=int |
| By: | Aaditya Mattoo (The World Bank) |
| Abstract: | The benefits of services trade reform are huge but services negotiations in the World Trade Organization (WTO) are making little progress. A proximate cause is the current negotiating process, based on an inertial request-and-offer approach rather than a set of goals that would give direction and momentum to the negotiations. The paper suggests that WTO members should consider: (1) locking in the current openness of cross-border trade for a wide range of services; (2) eliminating barriers to foreign investment either immediately or in a phased manner where regulatory inadequacies need to be remedied; and (3) allowing greater freedom of international movement at least for intra-corporate transferees and for service providers to fulfill specific services contracts. A deeper problem is that WTO members have sought to negotiate market access in services without adequately addressing concerns that the General Agreement on Trade in Services (GATS) commitments limit regulatory freedom unduly and unpredictably, that regulatory institutions in many countries are too weak to cope with liberalized markets, and that there is no provision for the regulatory cooperation that is necessary for successful liberalization, particularly of temporary labor mobility. Three types of actions are needed: (1) at the current stage of its development, the GATS must focus primarily on disciplines for measures that discriminate against foreign services and providers, rather than on politically sensitive and legally complex rules for nondiscriminatory measures; (2) a credible assistance mechanism must be established to help developing countries make the regulatory improvements needed for successful liberalization; and (3) where necessary, WTO members should make access commitments on labor mobility conditional on the fulfillment of specific conditions by source countries-to screen services providers, accept and facilitate their return, and combat illegal migration. |
| Keywords: | International economics |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3718&r=int |
| By: | Miriam Manchin (Tinbergen Institute, Rotterdam) |
| Abstract: | Despite the long relationship between the European Union and the African, Caribbean, and Pacific (ACP) countries aimed at encouraging their exports while stimulating growth and investment, the ACP states still face difficulties in integrating into the world economy. The author examines the non-least developed ACP countries' preferential trade with the EU. Her objective is to explain the determinants of preferential exports of ACP countries toward the EU and to assess the impact of preferences on trade volumes. The author also investigates the existence of a threshold in the offered duty reduction under which traders have no incentives to ask for preferences. |
| Keywords: | International economics |
| Date: | 2005–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3688&r=int |
| By: | Ganesh Seshan (The World Bank) |
| Abstract: | What is the effect of trade liberalization on households in developing countries? To what extent do the poor benefit when local markets are made more accommodative to international trade? The author empirically analyzes the distributional impact of trade policies on households in a low-income country with a large rural economy where labor markets are imperfect. The methodology in this paper, which can be applied to various types of labor market conditions, relates changes in prices attributed to trade reforms to changes in household welfare, income distribution, and poverty using theoretically consistent measures of producer and consumer welfare. The author investigates the effects on poverty and income distribution of national and international market integration in Vietnam's rice sector and fertilizer market between 1993 and 1998, a period of ongoing market reforms when the national poverty rate fell sharply from 59 percent to 37 percent. He finds that when the effects of opening the rice and fertilizer market are isolated, Vietnam's agricultural trade reforms did not contribute to a significant improvement in overall household welfare or decline in poverty over this period. Nonetheless, the liberalization exercise can explain about half of the reduction in poverty incidence among farm households. The results also show that liberalization did not exacerbate income inequality, but did generate gains for rural households across the distribution, particularly the poor, at the expense of urban households. |
| Keywords: | Agriculture, Rural development, International economics, Labor and employment |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3541&r=int |
| By: | Chad P. Bown (The Brookings Institution & Brandeis University) |
| Abstract: | Antidumping and related trade remedies are the most popular policy instruments that many of the largest importing countries in the World Trade Organization (WTO) system use to restrict international trade. While such trade remedies are also frequent targets of dispute settlement activity under the WTO, given that Panel and Appellate Body rulings have almost invariably found that some aspect of each reviewed remedy was inconsistent with WTO obligations, an open research question is why aren't more remedies targeted by dispute settlement? The author provides a first empirical investigation of the trade remedy and WTO dispute settlement interaction by focusing on determinants of WTO members' decisions of whether to formally challenge U.S. trade remedies imposed between 1992 and 2003. He provides evidence that it is not only the size of the economic market at stake and the capacity to retaliate under potential DSU (dispute settlement under standing)-authorized sanctions that influence the litigation decision of whether to formally challenge a measure at the WTO. The author also finds that if the negatively affected foreign industry has the capacity to directly retaliate through a reciprocal antidumping investigation and measure of its own, its government is less likely to pursue the case on its behalf at the WTO. This is consistent with the theory that potential complainants may be avoiding WTO litigation in favor of pursuing reciprocal antidumping and hence "vigilante justice.". |
| Keywords: | International economics |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3540&r=int |
| By: | Alessandro Nicita (The World Bank) |
| Abstract: | Empirical evidence suggests that global trade reforms are unlikely to produce analogous results across countries, especially when analyzing their effect on poverty. This implies that the analysis of trade reform on social welfare cannot be generalized and needs to be conducted on a country by country basis. Moreover, even within the same country, geographic areas, households, and individuals are likely to be differentially affected, some of them benefiting more than others, while others might lose. With this in mind, the author provides a quantitative estimate of the effect on Mexican households from the implementation of the Doha development agenda. His analysis uses a two-step approach for which changes in prices and factors are estimated through a CGE model (GTAP) and then mapped into the welfare function of the household using household survey data. The empirical approach the author uses aims to measure the impact of Doha implementation by tracing changes in the household prices of goods and factors and their impact on household welfare, taking particular account the role of domestic price transmission. The findings suggest that multilateral trade liberalization alone would have a negative effect on Mexican households, even though very small. However, when the implementation of the Doha development agenda is complemented by domestic policies aimed at increasing productivity and improving domestic price transmission, the overall effects become positive. The results point to the importance of domestic price transmission in determining the variance of the effects across households. |
| Keywords: | Poverty, International economics |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3707&r=int |
| By: | Patricio Aroca Gonzalez (Universidad Católica del Norte, Antofagasta, Chile); William F. Maloney (The World Bank) |
| Abstract: | Part of the rationale for the North American Free Trade Agreement (NAFTA) was that it would increase trade and foreign direct investment (FDI) flows, creating jobs and reducing migration to the United States. Since poor data on illegal flows to the United States make direct measurement difficult, Aroca and Maloney instead evaluate the mechanism behind these predictions using data on migration within Mexico where the census data permit careful analysis. They offer the first specifications for migration within Mexico, incorporating measures of cost of living, amenities, and networks. Contrary to much of the literature, labor market variables enter very significantly and as predicted once the authors control for possible credit constraint effects. Greater exposure to FDI and trade deters out-migration with the effects working partly through the labor market. Finally, the authors generate some tentative inferences about the impact on increased FDI on Mexico-U.S. migration. On average, a doubling of FDI inflows leads to a 1.5-2 percent fall in migration. |
| Keywords: | International economics, Labor and employment |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3601&r=int |
| By: | Patricio Aroca (Universidad Católica Del Norte Antofagasta, Chile); Mariano Bosch (The World Bank); William F. Maloney (The World Bank) |
| Abstract: | This paper studies the spatial dimension of growth in Mexico over the past three decades. The literature on regional economic growth shows a decrease in regional dispersion from 1970 to 1985, and a sharp increase afterward coinciding with the trade liberalization of the Mexican economy. Using spatial econometric, tools the authors analyze how the process of convergence/divergence has mapped spatially and whether it makes sense to talk about spatial regions in Mexico. Although the rich North-poor South dichotomy has dominated this phenomenon, interesting patterns emerge. Namely the distribution of growth after Mexico's post-liberalization seems to be much less associated with distance to the United States than the authors had initially expected. |
| Keywords: | International economics, Macroeconomics and growth |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3744&r=int |
| By: | Joaquim Bento de Souza Ferreira Filho (Universidade de São Paulo); Mark Horridge (Monash University, Melbourne, Australia) |
| Abstract: | This paper addresses the potential effects of the Doha round of trade negotiations on poverty and income distribution in Brazil, using an applied general equilibrium (AGE) and micro-simulation model of Brazil tailored for income distribution and poverty analysis. Of particular importance is the fact that the representative household hypothesis is replaced by a detailed representation of households. The model distinguishes 10 different labor types and has 270 different household expenditure patterns. Income can originate from 41 different production activities (which produce 52 commodities), located in 27 different regions in the country. The AGE model communicates to a micro-simulation model that has 112,055 Brazilian households and 263,938 adults. Poverty and income distribution indices are computed over the entire sample of households and persons, before and after the policy shocks. Model results show that even important trade policy shocks, such as those applied in this study, do not generate dramatic changes in the structure of poverty and income distribution in the Brazilian economy. The simulated effects on poverty and income distribution are positive, but rather small. The benefits are concentrated in the poorest households. |
| Keywords: | Agriculture, Poverty, International economics, Agriculture |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3701&r=int |
| By: | Björn Wellenius (The World Bank); Juan Galarza (The World Bank); Boutheina Guermazi (The World Bank) |
| Abstract: | The U.S.-Mexico case (2002-04) was the first (and so far only) case of World Trade Organization (WTO) dispute resolution on telecommunications services and the first on services only. The findings of the Panel charged with settling the dispute contain interpretations of the General Agreement on Trade in Services (GATS), especially its Annex on Telecommunications and the Reference Paper that sets regulatory principles. Although these interpretations strictly apply only to the case examined, they have implications for other countries and sectors and beyond trade law. The following are some of the findings. Telecommunications services originated in one country and terminated in another country are cross-border services under the GATS irrespective of whether the same service provider is present in both countries. The accounting rate regime, whereby operators share revenue from international services provided jointly, is subject to the discipline of cost-based interconnection for countries that have adopted the Reference Paper. Uniform settlement rates and proportional return are anticompetitive practices under the Reference Paper even when they are mandated by law. The lack of implementing regulations does not excuse the country from meeting its commitments under the GATS. Mexico and the United States, although not in full agreement with the Panel, did not appeal. An agreed plan to address the underlying legal and regulatory issues was successfully implemented in July 2005. |
| Keywords: | Infrastructure, International economics |
| Date: | 2005–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3759&r=int |
| By: | Stephen Meardon (Williams College) |
| Abstract: | A moment of consequence to the postbellum U.S. tariff debate was the 'conversion' of David Ames Wells, Commissioner of the Revenue from 1865- 1870, to free trade. When he began his work Wells was a disciple of the eminent American protectionist Henry C. Carey. By the age of forty, however, he had become America's answer to Britain's Sir Robert Peel: a public figure of tremendous influence, who, having changed his mind on the issue, became the standard-bearer for free trade in both the intellectual and political arenas. Half a century and more in the past, when Wells's name was better remembered in American economic and political history, several stories were told of the causes of his conversion: some attributed it ultimately to the force of ideas, some to interests. My purpose is to demonstrate that the unacknowledged but most important cause was Wells's relationship with Edward Atkinson, and Wells and Atkinson's mutual wish to grant effective protection, or net protection, to cotton manufacturers. The story of Wells's conversion that unfolds in the demonstration is not one that disentangles and assigns weights to the contributions of theory and interests. It shows instead how each determined the other. |
| Keywords: | Wells, David Ames; Atkinson, Edward; free trade; revenue commission; effective protection; net protection |
| JEL: | B1 B31 F13 N71 |
| Date: | 2005–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpmh:0512001&r=int |
| By: | Luz Elena Reyes de la Torre (ler@sai.com.mx); Jorge G. González (Jorge.Gonzalez@Trinity.edu) |
| Abstract: | Mexico's creation and use of safeguard and antidumping processes to advance its liberalization illustrate three key points: (1) The country was able to use the instruments without losing political control. In a period of crisis that threatened congressional approval of critical steps in the liberalization-brought on by currency overvaluation and recession, along with unexpected demands from the United States in the North American Free Trade Agreement negotiations-the government applied a number of trade defense measures. Once the problems were addressed with adequate instruments the number of measures dropped drastically. The instruments had not been captured by protection-seeking interests; (2) The country adopted a liberalization-accepting measure of international norms. An important innovation that Mexico made operational was the use within World Trade Organization (WTO) rules of prevailing international prices as the measure of competition that industry was expected to meet. The WTO rules would also have allowed the use of other standards-as in traditional antidumping-using countries-that impose less discipline. Moreover, the Mexican standard was consistent with the government-industry understanding that though Mexican industry would be protected against extraordinary circumstances it would be expected to face up to international competition; (3) Political judgment and political courage are essential. While mastery of the technical elements of a safeguard or antidumping investigation is mandatory, sustaining liberalization depends in significant part on the political skills to know when to emphasize the technical elements, when to rely more on the discretion the government retains under the rules, and on the courage to do it. |
| Keywords: | International economics |
| Date: | 2005–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3684&r=int |
| By: | Bernard Hoekman (The World Bank, Groupe d'Economie Mondiale, Sciences Po and CEPR); Çaglar Özden (The World Bank) |
| Abstract: | Nonreciprocal trade preferences and provisions in the GATT/WTO that allow developing countries greater leeway to retain or use protectionist policies are two of the central planks of so-called special and differential treatment (SDT) for developing countries in the multilateral trading system. The authors survey the literature on the rationales, institutional features, and economic effectiveness of SDT. A large literature has emerged on SDT in the past 50 years, by both proponents and opponents. They summarize a number of key contributions on the subject, with a special emphasis on the evaluation of the impact of SDT, especially preferential market access. The issue of SDT has become very topical again, following a period during which it was viewed as an outdated concept for the multilateral trading system. The authors therefore devote attention as well to a number of recent contributions that discuss (1) whether there is a continued need for SDT, and (2) how this might be designed from both a development (recipient) objective and from the perspective of the trading system more generally. A major theme of the survey is that most of the issues that are debated today were already being discussed in the 1960s. The authors conclude that those who questioned the value of unilateral preferences have proven to be prescient. |
| Keywords: | International economics |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3566&r=int |
| By: | Martin Ravallion (The World Bank) |
| Abstract: | The idea that developing countries face a trade-off between poverty and inequality has had considerable influence on thinking about development policy. The experience of developing countries in the 1990s does not, however, reveal any sign of a systematic trade-off between measures of absolute poverty and relative inequality. Indeed, falling inequality tends to come with falling poverty incidence. And rising inequality appears more likely to be putting a brake on poverty reduction than to be facilitating it. However, there is evidence of a trade-off for absolute inequality, suggesting that those who want a lower absolute gap between the rich and the poor must in general be willing to see lower absolute levels of living for poor people. |
| Keywords: | Poverty |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3579&r=int |
| By: | Thomas W. Hertel (Purdue University and The World Bank); Alan Winters (The World Bank) |
| Abstract: | This paper reports on the findings from a major international research project investigating the poverty impacts of a potential Doha Development Agenda (DDA). It combines in a novel way the results from several strands of research. Intensive analysis of the DDA Framework Agreement pays particularly close attention to potential reforms in agriculture. The scenarios are built up using newly available tariff line data and their implications for world markets are established using a global modeling framework. These world trade impacts, in turn, form the basis for 12 country case studies of the national poverty impacts of these DDA scenarios. The focus countries include Bangladesh, Brazil (two studies), Cameroon, China (two studies), Indonesia, Mexico, Mozambique, the Philippines, Russia, and Zambia. The diversity of approaches taken in these studies allows the paper to reflect local conditions and priorities and illustrates many important facets of the trade and poverty link. It does, however, limit the ability to draw broader conclusions. Thus an additional study provides a 15-country cross-section analysis, and a global analysis provides estimates for the world as a whole. |
| Keywords: | Agriculture, Poverty, International economics |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3757&r=int |
| By: | Julio J. Nogués (Universidad Di Tella); Elías Baracat (Independent consultant and former President of the Comisión Nacional de Comercio Exterior) |
| Abstract: | Beginning in the late 1980s, Argentina implemented a series of reforms that were revolutionary in speed and scope, including trade liberalization. After the implementation of these policies, a record number of antidumping petitions came forward. Under a situation of high inflation, the government reinforced its fiscal and monetary policies by announcing that it would minimize the use of such measures. The flexible disciplines of the existing domestic antidumping regulations facilitated this objective. Later, when the GATT/WTO-sanctioned trade remedies were implemented, the government made a serious attempt to establish discipline by including liberal regulations and creating special institutional arrangements. A presumption built into the construction of the new mechanisms was that adhering to WTO requirements would strengthen the resistance against protection. This presumption turned out to be false. Changing circumstances, including severe peso overvaluation, had significant effects on the number and outcome of antidumping investigations. Regarding safeguards, the government followed the letter and the spirit of the WTO agreement. In relation to the number of petitions, few measures have been implemented. Rejections were based on a concern for consumer costs and on failure of the industry seeking protection to provide a convincing modernization plan. This, plus the fact that some cases were brought to the WTO Dispute Settlement Body, have made safeguards a less attractive instrument for protection-seekers than antidumping. An important positive side of the story is that unlike previous balance of payments adjustments, in spite of the major crisis that followed the recent devaluation, the hard-won liberalization has been maintained. |
| Keywords: | Industry, International economics, Public sector management |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3587&r=int |
| By: | Honorio Kume (Instituto de Pesquisa Economica Aplicada (IPEA)); Guida Piani (Instituto de Pesquisa Economica Aplicada (IPEA)) |
| Abstract: | The authors focus on the evaluation of the antidumping regime from 1988 through 2003. During these years the Brazilian economy had to cope with several periods of macroeconomic instability and overvaluation of the domestic currency, particularly from 1990-92 and 1994-98. As a result, from 1992 through 1998, import volumes increased significantly. Although during these years, the demand for antidumping protection was growing, the number of investigations concluded with an affirmative determination was only 52 percent. The authors explain that the institutional framework in charge of administering the antidumping regime was subject to several reforms. Along this process, the Ministry of Development, Industry, and Trade saw its role strengthened. This ministry has a more protectionist bias than the Ministry of Finance that, during the initial years of the liberalization program, played a prominent role in decisions regarding antidumping investigations and measures. The authors conclude that in comparison with other countries that are important users of the antidumping mechanism, the Brazilian experience reveals two interesting features: 1) A relatively small rate of final positive determinations. 2) A tradition of applying antidumping duties in amounts that on average have been quite lower than the full dumping margins. |
| Keywords: | International economics |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3562&r=int |
| By: | Meghana Ayyagari (The George Washington University); Asli Demirgüç-Kunt (The World Bank); Christophe Vojislav Maksimovic (University of Maryland) |
| Abstract: | The authors examine how well several institutional and firm-level factors and their interactions explain firms' perceptions of property rights protection. Their sample includes private and public firms that vary in size from very small to large in 62 countries. Together, the institutional theories they investigate account for approximately 70 percent of the country-level variation, indicating that the literature is addressing first-order factors. Firm-level characteristics such as legal organization and ownership structure are comparable to institutional factors in explaining variation in property rights protection. A country's legal origin and formalism index predict property rights variation better than its openness to international trade, its religion, its ethnic diversity, natural endowments or its political system. However, these results are driven by the inclusion of former socialist economies in the sample. When the authors exclude the former socialist economies, legal origin explains considerably less than openness to trade and endowments. Examining a broader set of variables for robustness, they again find that when they exclude former socialist countries, legal origin explains comparatively little of the variation in perceptions of judicial efficiency, corruption, taxes and regulation, street crime, and financing. |
| Keywords: | Domestic finance |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3709&r=int |
| By: | Olivier, CARDI |
| Abstract: | This contribution shows that the persistence and the time of occurence of the shock matter in determining the long-run macroeconomic aggregates’ responses after permanent and transitory terms of trade shocks. Within a simple two-good small open economy model, we differentiate analyticaly between the (long-run) effects of four types of negative terms of trade disturbances of different degrees of persistence and occurence. We distinguish between permanent and transitory shocks, on the one hand, and between anticipated and unanticipated shocks, on the other hand, and finally we consider a permanent perturbation but viewed as temporary by agents. The application of a new analytical two-step procedure to the zero-root property case allows to obtain new conclusions not developed by previous studies : (i) a strong persistent terms of trade worsening may induce a decline in the long-run in the real expense and in the stock of net foreign assets greater than after a permanent disturbance, (ii) real expense may rise or fall in the long-run after an anticipated future permanent negative external shock depending on the time of occurence of the disturbance, and (iii) fails in expectation may induce large cut in real expense and translate into large losses in welfare |
| Keywords: | Small open economy; Terms of trade; Savings; Temporary shock |
| JEL: | F32 F41 E21 |
| Date: | 2005–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2005030&r=int |
| By: | Deepak Shah (Gokhale Institute of Politics & Economics, B.M.C.C. Road, Deccan Gymkhana, Pune 411004, Maharashtra, India) |
| Abstract: | India is known for its livestock wealth and ranks high among the nations having bovine population. However, despite having huge livestock population, India stands insignificant in the world trade of livestock products. The recent concerted efforts made by the government in the era of liberalization after opening up of the national economy to the international market have certainly boosted India’s export trade of livestock products to newer heights. The dairy industry of India is already at a take-off stage and the entry of the corporate sector following the liberalized policies of government is bound to complement the efforts of National Dairy Development Board (NDDB) to usher in a white revolution. The most important achievement of the dairy industry is the near-self sufficiency in milk production. Nonetheless, the possibility of India emerging as a potential exporter of various livestock products will largely depend on India’s own ability to exploit her potential in this sector and generate exportable surplus of these commodities, aside her competitive strength in the world market. |
| Keywords: | Trade Performance of India in Livestock Sector |
| JEL: | F1 F2 |
| Date: | 2005–12–04 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpit:0512004&r=int |
| By: | Terry Roe (University of Minnesota); Ariel Dinar (The World Bank); Yacov Tsur (Hebrew University of Jerusalem, Israel); Xinshen Diao (International Food Policy Research Institute) |
| Abstract: | The authors focus on policy interventions for improving irrigation water allocation decisions by including both macro and micro considerations in a unified analytical computable general equilibrium (CGE) framework. The approach is demonstrated, using the case of Morocco, by analyzing selected policy (top-down and bottom-up) interventions and external shocks that affect the water sector. Both direct and indirect effects of these interventions are identified. The top-down (macro-to-micro) links are of a trade reform type. The bottom-up (micro-to-macro) links pertain to changes in farm water assignments and the possibility of water trading. The authors find that water productivity is strongly influenced by these policies, with the general equilibrium (indirect) effects modifying and sometimes reversing the partial equilibrium (direct) effects. They also find that the impacts of the two reforms assessed are different, with trade reform having an absolute impact of a higher magnitude than the water reform. Finally, the authors show that the sequence of introducing the policy reforms has different consequences. |
| Keywords: | Agriculture, Poverty, Rural development, Labor and employment, Macroeconomics and growth |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3550&r=int |
| By: | Anne-Sophie Robilliard (Institut de Recherche pour le Développement (IRD) and DIAL, Paris); Sherman Robinson (University of Sussex) |
| Abstract: | Indonesia experienced rapid growth and the expansion of the formal financial sector during the last quarter of the 20th century. Although this tendency was reversed by the shock of the financial crisis that spread throughout Asia in 1997 and 1998, macroeconomic stability has since then been restored, and poverty has been reduced to pre-crisis levels. Poverty reduction remains nevertheless a critical challenge for Indonesia with over 110 million people (53 percent of the population) living on less than $2 a day. The objective of this study is to help identify ways in which the Doha Development Agenda might contribute to further poverty reduction in Indonesia. To provide a good technical basis for answering this question, the authors use an approach that combines a computable general equilibrium (CGE) model with a microsimulation model. This framework is designed to capture important channels through which macroeconomic shocks affect household incomes. It allows making recommendations on specific trade reform options as well as on complementary development policy reforms. The framework presented in this study generates detailed poverty outcomes of trade shocks. Given the magnitude of the shocks examined here and the structural features of the Indonesian economy, only the full liberalization scenario generates significant poverty changes. The authors examine their impact under alternative specifications of the functioning of labor markets. These alternative assumptions generate different results, all of which confirm that the impact of full liberalization on poverty would be beneficial, with wage and employment gains dominating the adverse food price changes that could hurt the poorest households. Two alternative tax replacement schemes are examined. While direct tax replacement appears to be more desirable in terms of efficiency gains and translates into higher poverty reduction, political and practical considerations could lead the Government of Indonesia to choose a replacement scheme through the adjustment of value-added tax rates across nonexempt sectors. |
| Keywords: | International economics |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3747&r=int |
| By: | Richard Webb (University of San Martín de Porres); Josefina Camminati (The World Bank); Raúl León Thorne (The World Bank) |
| Abstract: | Peru's experience in the application of antidumping and safeguard measures is characterized by a radical change in the philosophy and procedures of trade at the beginning of the 1990s, and by an increasing use of these mechanisms. Trade liberalization was accompanied by the liberalization of foreign currency transactions and of financial and labor markets. Also, the internal revenue administration was modernized, institutions for regulation and competition defense were created, and state enterprises were transferred to private owners or concessionaires. New laws and institutions were created to regulate markets, including INDECOPI, a novel government agency charged with antimonopoly regulation and consumer defense, and which houses the Antidumping and Subsidies Commission. This highly autonomous and technical Commission became the central player in the implementation of WTO rules and procedures for fair trade. Since the reform was launched, a total of 81 trade protection cases have been presented, of which 57 were followed by a dumping investigation. The application of antidumping duties was approved for 29 of the cases investigated. Only two cases of safeguard investigations were recorded, one of which (Chinese textile clothing articles) is still in the negotiation phase. This paper reviews that case experience in detail, concluding that Peru has clearly differentiated between unfair competition and dumping on the one hand, and damage and safeguards on the other, and has applied strict technical criteria to the former and broader political considerations to the latter. Despite recent indications of a partial retreat from those principles, the decade-old reform is expected to last. |
| Keywords: | International economics |
| Date: | 2005–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3658&r=int |
| By: | Ana M. Fernandes (The World Bank); Alberto E. Isgut (Wesleyan University) |
| Abstract: | The empirical evidence on whether participation in export markets increases plant-level productivity has been inconclusive so far. The authors explain this inconclusiveness by drawing on Arrow's (1962) characterization of learning-by-doing, which suggests focusing on young plants and using measures of export experience rather than export participation. They find strong evidence of learning-by-exporting for young Colombian manufacturing plants between 1981 and 1991: total factor productivity increases 4-5 percent for each additional year a plant has exported, after controlling for the effect of current exports on total factor productivity. Learning-by-exporting is more important for young than for old plants and in industries that deliver a larger percentage of their exports to high-income countries. |
| Keywords: | Private sector development, International economics |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3544&r=int |
| By: | Jorge F. Balat (The World Bank); Guido G. Porto (The World Bank) |
| Abstract: | The Zambian cotton sector went through significant reforms during the 1990s. After a long period of parastatal control, a process of liberalization in cotton production and marketing began in 1994. These reforms were expected to benefit agricultural farmers. In Zambia, these are rural, often vulnerable, smallholders. The authors investigate the connection between the dynamics of the cotton sector and the dynamics of poverty and evaluate to what extent cotton can work as a vehicle for poverty alleviation. They find that cotton can indeed act as an effective mechanism for increased household welfare. They also find income gains associated with cotton production, as well as positive impacts on the long-run nutritional status of Zambian children. The impacts, however, are relatively small. |
| Keywords: | Agriculture, Poverty, Rural development |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3697&r=int |