WHY AID? - World Bank
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Transcript WHY AID? - World Bank
AID FOR TRADE IN AFRICA:
Why Trade?
Why AID?
MOBILIZING AID FOR TRADE: FOCUS
ON AFRICA
Dar es Salaam, Tanzania
John Page, Chief Economist
Africa Region, World Bank October
1
2007
Outline:
WHY TRADE?
Making Growth Sustainable
Creating an Export Push
WHY AID?
Africa can compete. But…
High Indirect Costs Limit Competitiveness
AID FOR TRADE
Supporting Institutional and Policy Reform
Investing in Infrastructure
Reinforcing the Country Based Model
2
WHY TRADE?
Making Growth Sustainable
3
African per capita income is now increasing
in tandem with other developing countries
Annual Change in Real per capita GDP %
Forecast
7
6
5
4
3
2
1
0
-1 1990
-2
-3
-4
Source: World Bank
Developing Countries
Developing excluding China and India
Sub-Saharan Africa
High-Income Countries
1995
2000
2005
2008
Why trade?
4
Economic Performance is Becoming More
Diverse
Why trade?
5
THREE KEYS TO SUSTAINABILITY:
Avoiding Growth Collapses
Accelerating Productivity Growth
Boosting Private Investment
6
WHY TRADE?
CREATING AN EXPORT PUSH TO
SUSTAIN GROWTH
Export Performance
Export Diversification
7
Exports are important …
Non-oil export share of GDP (% )
45%
40%
35%
30%
25%
1983-1985
20%
1993-1995
15%
2003-2005
10%
5%
0%
E. Asia
and
Pacific
ECA
Latin
America &
Caribbean
MNA
S. Asia
SSA
Source: IMF WEO database.
Note: export shares are unweighted average.
Creating an export push
8
…But are growing slowly…
30.0%
Exports growth annual %, simple average
Africa Average
Africa top performers
Asia top performers
China
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
1960's
1970's
1980's
1990's
2000~2005
Creating an export push
9
…And are declining in importance
for Africa’s top performers
70%
60%
Africa average
Africa top performers
Asia top performers
China
Export as % of GDP
50%
40%
30%
20%
10%
0%
1960's
1970's
1980's
1990's
2000~2005
Creating an export push
10
Africa’s Share of World Trade is Falling
Creating an export push
11
and Africa’s exports remain concentrated
Concentration and Diversification of Export: 2000-2004 Average
90
180
80
160
70
140
60
120
50
100
40
80
30
60
20
40
10
20
0
0
Europe and Central East Asia- Pacific
Asia
Export Concentration Index (0-100)
left axis
South Asia
Latin America and
Caribbean
Share of Top 5 Products in Total Exports (%)
left axis
Middle East and Sub Saharian Africa
North Africa
No. of Exported Product Categories
right axis
Source: World Bank World Trade Indicators
Creating an export push
12
WHY AID?
African Can Compete, But…
High Indirect Cost Limit
Competitiveness
13
Factory floor costs compare well
with India & China
Direct cost per male shirt
$0.80
$0.65
$0.60
$0.40
$0.20
$0.29
$0.16 $0.18 $0.12 $0.16 $0.19
$0.17
$0.00
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Why Aid?
14
Faster Growing African Countries Are
Diversifying Their Exports
Export Concentration Index (0-100)
70
Share of Top 5 Products in Total Exports (% )
84
82
60
80
50
78
76
40
74
30
72
70
20
68
10
66
0
64
Other African Countries
High Growth African Countries
1995-99 Ave.
2000-04 Ave.
Other African Countries
1995-99 Ave.
High Growth African Countries
2000-04 Ave.
No. of Exported Product Categories
90
80
70
60
50
40
Source: World Bank World Trade Indicators
30
20
10
0
Other African Countries
1995-99 Ave.
High Growth African Countries
2000-04 Ave.
Why Aid?
15
African firms are sharply disadvantaged
relative to China due to higher indirect
costs.
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
Et
hi
op
ia
Er
itr
ea
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ig
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ia
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oz
am a
bi
qu
e
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Ta a
nz
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ia
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ng
la
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In
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Ch
in
a
0.20
0.10
0.00
net TFP
excess indirect costs gap
gross TFP gap due to losses*
unexplained gross TFP gap
16
*due to power losses, delivery delays, shipment losses, crime
Why Aid?
Africa lags other regions in the cost of
doing business …
Ease of doing business rank, Simple average by region
140
132
131
Average Ranking of Doing Business, the lower the better
120
2005*
2006**
100
92
81
72
80
74
92
98
102
105
84
77
60
40
20
0
Sub Saharan
Africa
East Asia &
Pacific
East Europe
and Central
Asia
Latin America
and Caribbean
Middle East
and North
Africa
South Asia
Data sources: World Bank Doing Business Database as of November 2006..
*Normalized ranking from Doing Business 2006.
** Ranking from Doing Business 2007.
Why Aid?
17
… And in access to infrastructure
Access to electricity by region
Access to electricity (% of population)
100
86.6%
90
87.3%
90.4%
80
70
60
50
40.8%
40
30
24.7%
20
10
0
Sub-Saharan Africa
South Asia
East Asia & Pacific
Middle East & North Africa
Data sources: The World Bank WDI database, April 2006.
Latin America & Caribbean
Building the private sector
Why Aid?
18
The time to clear goods at port is several
days in many countries in Africa
Days to clear imports, median
In
di
a
Ch
in
a
M
or
oc
co
en
ya
K
Za
m
bi
a
ga
nd
a
U
ig
er
ia
N
Er
i tr
ea
Et
hi
op
M
ia
oz
am
bi
qu
e
20
18
16
14
12
10
8
6
4
2
0
Days to clear exports, median
Why Aid?
19
Domestic Constraints Handicap
African Firms In Global Supply Chain
Industries
Subramanian (2006)
Why Aid?
20
Alleviating domestic constraints could
increase exports in African, particularly for
manufactured products
Predicted Increase in
Bilateral Exports (%) of
Africa
18
16
14
12
10
8
6
4
2
0
15.8
All Mechandise Exports
Manufactured Exports
17.1
15.3
1.9
2.2
2.3
10% improvement in Exporter
Country in Africa
Export Customs
Procedures
Internet Access
Power
Infrastructure
Source: Africa’s Silk Road (2007)
Why Aid?
21
AID FOR TRADE
Supporting Institutional and Policy
Reform
Diagnostic work to identify key
constraints
Capacity Development
Improving Policies at and Behind the
Border
Supporting effective Regional
Organizations
22
AID FOR TRADE
Investing in Infrastructure
An Export Push Needs an
Infrastructure Push
Creating Space For The Private
Sector
Public Resources will Still Be
Needed
23
AID FOR TRADE
Reinforcing The Country Based Model
Trade as a Development Issue
Mainstreaming Trade in Poverty
Reduction Strategies
Scaling-up: Avoiding Vertical
Programs
24