Transcript Developing countries

Global Economic Prospects 2004:
Realizing the Development Promise
of the Doha Agenda
Hans Timmer and Uri Dadush
World Bank
September 2003
Main messages…

A global recovery is underway, but remains fragile as
macro stimulus in the rich countries has largely run its
course.

Developing countries continue to out-pace OECD
countries as a result of increased openness and
improved policies.

The Doha Agenda has the potential to speed growth,
raise incomes, and reduce poverty, and all countries
have an interest in its success.
But to realize this potential, governments have to
tackle inequities in the world trading system – and to
forge an agreement than benefits the poor.

The rich countries: Road to recovery

Indicators now
favorable for recovery
and stronger growth in
2004
Corporate profits, USA and Japan
750
11,000
Japan [right scale]
10,000
700
- Financial headwinds on
investment easing
9,000
650
8,000
600
7,000
USA [left]
550
2000Q1
6,000
2001Q1
2002Q1
2003Q1
The rich countries: Road to recovery

Indicators now
favorable for recovery
and stronger growth in
2004
- Financial headwinds on
investment easing
- Equity markets stronger
DJI, DAX & TOPIX, index Mar-03=100.
140
DAX
135
130
125
120
115
110
DOW JONES
105
TOPIX
100
95
90
85
3/3/2003
4/2/2003
5/2/2003
6/1/2003
7/1/2003 7/31/2003
The rich countries: investment now rising....
Real fixed investment, percent change at annual rates
8
Japan
4
0
-4
Euro Area
-8
-12
United States
-16
Q2 01
Q3 01
Q4 01
Q1 02
Q2 02
Q3 02
Q4 02
Q1 03
Q2 03
.... and production is turning the corner
Industrial production, percent change at annual rates
8
Forecast
6
High income countries
4
2
0
-2
-4
-6
-8
Jan-01
May-01
Sep-01
Jan-02
May-02
Sep-02
Jan-03
May-03
Sep-03
The rich countries: a moderate recovery...
Real GDP, percent change
5
High income countries
4
Forecast
3
2
East Asia
financial crisis
1
4
20
05
3
2
1
98
97
96
95
94
93
92
91
89
19
90
88
87
86
85
84
83
82
99
20
00
2001 downturn
Early 1980s recession
19
81
0
Early 1990s recession
The international environment improves...
2001 2002
Percentage change
Export market growth
2003 2004
/1
-0.2
2.5
6.8
8.0
Non-oil commodity prices
-9.1
5.1
6.9
1.1
U.S. LIBOR (%)
3.5
1.8
1.0
2.0
Emerging market spread (bp)
797
728
610
...
Source: World Bank. Note: /1 import demand in partner markets.
The international environment improves...
2001 2002
Percentage change
Export market growth
2003 2004
/1
-0.2
2.5
6.8
8.0
Non-oil commodity prices
-9.1
5.1
6.9
1.1
U.S. LIBOR (%)
3.5
1.8
1.0
2.0
Emerging market spread (bp)
797
728
610
...
Source: World Bank. Note: /1 import demand in partner markets.
Metal prices firm... another indication of
anticipated recovery
Industrial Production and Metals Price Index (Jan-2001 = 100)
105
100
104
98
103
96
102
94
101
92
World IP
100
90
99
88
98
86
Metals and
Minerals
97
96
84
82
95
Jan-01
80
May-01
Sep-01
Jan-02
May-02
Sep-02
Jan-03
May-03
The international environment improves...
2001 2002
Percentage change
Export market growth
2003 2004
/1
-0.2
2.5
6.8
8.0
Non-oil commodity prices
-9.1
5.1
6.9
1.1
U.S. LIBOR (%)
3.5
1.8
1.0
2.0
Emerging market spread (bp)
797
728
610
...
Source: World Bank. Note: /1 import demand in partner markets.
Strong growth of industrial production in
Forecast
developing countries
Industrial Production, 3m/3m saar
15
Developing
Countries
10
5
0
World
High Income
Countries
-5
-10
Jan-01
May-01
Sep-01
Jan-02
May-02
Sep-02
Jan-03
May-03
Sep-03
Strong growth of industrial production in
Forecast
developing countries
Industrial Production Index (Jan-1999 = 100)
135
130
125
120
Developing
Countries
115
World
110
105
High Income
Countries
100
Jan-99
Jul-99 Jan-00
Jul-00 Jan-01
Jul-01 Jan-02
Jul-02 Jan-03
Jul-03
The developing countries: a robust outlook
Real GDP, percent change
Forecast
5
4
Developing countries
Early 1980s
debt crisis
3
2001 Global
downturn
Trend growth
2
East Asia financial crisis
1
1990s recession
Transition countries
0
81
9
1
82
83
84
85
86
87
88
89 990
1
91
92
93
94
95
96
97
98
99 000
2
1
2
3
4
05
0
2
The developing countries: ... and the OECD
Real GDP, percent change
Forecast
5
Developing countries
4
3
2
1
High income countries
0
81
9
1
82
83
84
85
86
87
88
89 990
1
91
92
93
94
95
96
97
98
99 000
2
1
2
3
4
05
0
2
Driven by increased openness in
manufacturing
Developing country merchandise exports ($billion)
1600
1400
Other
manufacturing
1200
1000
Equipment
800
ICT
600
Autos and parts
Textile and clothing
400
200
Processed foods
Natural resources
Agriculture
0
1965
1969
1973
1977
1981
1985
1989
1993
1997
Improved per-capita growth longer term
Real GDP per capita growth, 1990s and 2006-2015
6.5
6.4
5.4
1990s
5.0
2006-2015
4.1
3.3
3.5
3.3
2.5
1.7
2.0
2.5
1.6
1.2
0.5
-0.2
-1.0
-1.8
-2.5
East Asia
South Asia
East. Eur. &
Central Asia
Latin
America
Middle East Sub-Saharan
& North
Africa
Africa
As productivity growth is expected to
accelerate…
Decomposition of GDP growth 2005-2015
Percent
(Average per cent per annum)
7
6
5
4
3
2
1
0
-1
High-income East Asia Europe and
Latin
Middle East South Asia
countries and Pacific Central Asia America and and North
the
Africa
Caribbean
Labor
Capital
Productivity
SubSaharan
Africa
... compared to the 1990s
Decomposition of GDP growth 1990-2000
(Average per cent per annum)
8
Percent
6
4
2
0
-2
-4
High-income East Asia Europe and
Latin
Middle East South Asia
countries and Pacific Central Asia America and and North
the
Africa
Caribbean
Labor
Capital
Productivity
SubSaharan
Africa
Key Cancun Messages





Think “Development”
Agriculture first
South-South Trade is critical
Preferences help, but don’t define success
Development Community has a big role
Potential of Doha Agenda
All countries have an interest in a successful
Doha Agenda … $270 - $520 billion
US $billions change in real income in 2015 relative to baseline
400
350
$1997 billion
300
250
Dynamic gains
Static gains
200
150
100
50
0
High-income countries
Developing countries
Potential of Doha Agenda
More people would be lifted above the
poverty line…140 million…many in Africa
$2 per day
change in the number of poor in 2015 relative to the baseline
$1 per day
70
60
Millions
50
40
30
20
10
0
East Asia
and Pacific
Europe and
Latin
Central Asia America and
the
Caribbean
Source: World Bank staff simulations.
Middle East
and North
Africa
South Asia
Sub-Saharan
Africa
World trading system…
Incomes in developing countries will be
$540 billion higher – with 13% fewer
poor -- if Doha were to succeed
fully….
Most gains come from trade
reforms in the South…
116 b. in income gains from reforms
in high-income countries
$424 b from
reforms in
developing
countries
…and this does not include services…
Key Cancun Messages





Think “Development”
Agriculture first
South-South Trade is critical
Preferences help, but don’t define success
Development Community has a big role
Realizing the Promise of the Doha Agenda
Developing countries have failed to penetrate
agricultural markets of rich countries
Developing countries’ share of total world exports
Manufacturing
Agriculture
30
30
25
Exports to rich countries
25
20
20
15
15
10
10
5
Exports to poor countries
0
5
Exports to rich countries
Exports to poor countries
0
1980
1990
2000
1980
1990
2000
Protection of sugar and wheat in rich countries
has increased domestic production and driven
net imports to zero
35
Production and net imports of sugar in
EU, Japan, and US, 1965–2002 (millions of tons)
30
Production
20
15
10
Net imports
5
0
-5
Production and net imports of wheat in
EU, 1965–2002 (millions of tons)
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001
120
Production
100
80
Mn., tons
MN., tons
25
60
40
20
Net imports
Source: FAO
0
1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001
-20
-40
Realizing the Promise of the Doha Agenda
Protection in rich countries is high and unchanged since
the Uruguay round…
Industrial countries: Producer Support
300
Direct subsidies
250
200
Border protection
150
100
50
0
86-88 99-01
EU
86-88 99-01
US
86-88 99-01
Japan
* As a percent of output at world prices
Source: OECD
86-88 99-01
Other
industrial
Realizing the Promise of the Doha Agenda
Protection in rich countries is high and unchanged since
the Uruguay round…though developing countries have
reduced barriers
Industrial countries: Producer Support Estimate
300
Direct subsidies
Developing countries: average tariffs for
agriculture
300
250
250
200
200
Border protection
150
150
100
100
50
50
0
86-88 99-01
EU
86-88 99-01
US
86-88 99-01
Japan
* As a percent of output at world prices
Source: OECD
86-88 99-01
1990
0
Other
industrial
Source: TRAINS
1995
2000
Specific duties mask high protection
Percentage of Tariff Lines Non Ad-Valorem
Percentage of tariff lines
35
Agriculture
30
25
20
Manufacturing
15
10
5
0
QUAD
Large Middle
Income
Source: WTO IDB (MFN Applied Duties)
Other Middle
Income
Lower Income
Key Cancun Messages





Think “Development”
Agriculture first
South-South Trade is critical
Preferences help, but don’t define success
Development Community has a big role
Realizing the Promise of the Doha Agenda
Rich countries levy higher tariffs on imports
from developing countries
Av tariffs of industrial countries charged to exporters
from various regions, 1997 (percent)
9
8
7
6
5
4
3
2
1
0
Industrial
Latin
SubEast Asia
America Saharan
and
Africa
Caribbean
Europe
and
Central
Asia
Middle
East
South
Asia
Realizing the Promise of the Doha Agenda
…and so do other developing countries
Protection rates faced by LAC exporters of manufactures, 1997
percent
25
20
15
10
5
0
East Asia Europe
and
Central
Asia
Latin
America
Middle
East
South
Asia
Sub- Industrial
Saharan
Africa
Realizing the Promise of the Doha Agenda
Developing countries pay more of their foreign
tariffs to rich countries and to neighbors
Share of tariff burden,
percent
100
90
80
70
60
50
40
30
20
10
0
Rest
of world
Intra-region
Industrial
Industrial
East Asia
Europe and
Central
Asia
Latin
Middle East South Asia
America
and North
and
Africa
Caribbean
SubSaharan
Africa
Improving trade logistics can be as
important as cutting tariffs…ports, customs,
transport
Average number of days to clear customs for sea cargo
Developed
East Asia and
Pacific
Latin America
and Caribbean
Africa
South Asia
0
2
4
6
8
10
12
Development assistance is key to improving ports, customs
and trade infrastructure
Source: International Exhibition Logistics Associates, based on a sample of countries in
each region
Key Cancun Messages





Think “Development”
Agriculture first
South-South Trade is critical
Preferences help, but don’t define
success
Development Community has a big role
Trade preferences have had only marginal
success
Share of LDCs in EU and US imports,
1966–2002 (percent)
1.0%
0.9%
US
0.8%
0.7%
0.6%
0.5%
EU
0.4%
0.3%
0.2%
0.1%
0.0%
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: WITS.
Trade preferences have had only marginal
success
Share of LDCs in EU and US imports,
1966–2002 (percent)
1.0%
Share of preferential programs in US
imports, 1966–2002 (percent)
2.0%
0.9%
US
0.8%
1.8%
0.7%
1.4%
0.6%
1.2%
0.5%
EU
0.4%
CBI
1.6%
1.0%
AGOA
0.8%
0.3%
0.6%
0.2%
0.4%
0.1%
0.2%
Andean
0.0%
0.0%
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: WITS.
1996
1997
1998
1999
2000
2001
2002
Figure 6 Fewer exporters to the Quad countries
are taking advantage of import preferences
Share of potential imports under GSP that entered with preferential access,
1994-2001 (percent)
60.0
55.0
50.0
45.0
40.0
35.0
30.0
1994
1995
Source: Inama (2003).
1996
1997
1998
1999
2000
2001
Preferences reduce pressures to engage in
reciprocal tariff reductions…leaving the poorest
countries with highest protection
Av. tariffs of countries in US GSP and those dropped from GSP
(percent)
60%
In GSP
50%
40%
30%
Dropped
from GSP
20%
10%
0%
Duties/Imports
Avg Nominal Tariff
Source: Ozden and Reinhardt (2002).
Imports/GDP
Key Cancun Messages





Think “Development”
Agriculture first
South-South Trade is critical
Preferences help, but don’t define success
Development Community has a big
role
Role of the Development
Community
 Analyze and advocate trade proposals that promote
development
 Dialogue with key constituencies
• Developing country policymakers
• Other stakeholders—donors, NGOs, private sector
• General public opinion
 Provide technical assistance and build trade capacity in
clients
 Support integration of trade in country strategies
For the development promise of the Doha
agenda to be realized, all countries have to
take responsibility

Rich countries have to lead in agriculture, laborintensive manufactures, and development
assistance as well as in services (mode 4)

Middle income countries have to be willing to
provide new access in services and lower high
external tariffs—benefiting themselves and their
neighbors

Low-income countries, while seeking donor
assistance and derogation on resource-intensive
rules, have to be willing to reform their own
border protection.