Transcript Trade Facilitation and Economic Growth

Trade Facilitation and
Economic Growth: The
New Agenda
John S. Wilson, Lead Economist
The World Bank
Australian National University
Canberra, Australia
August 9, 2006
1
Overview

Trade Facilitation in Context
• Economic Growth and Driving Forces

Why Barriers and Trade Costs Matter

Policy Tools and Action Ahead
• WTO, APEC, and Development Agenda
2
Growth – across regions
(World Bank – Global Economic Prospects Report)
•Real GDP growth, 2003-2006
2003
9
8
8.1 8.3
6.8 6.9
6
Percent
2005e
2006f
7.9
7.8
7
5
2004
7.2
6.4
6.1
5.3 5.2
4.6
5.2
5.8
5.4
4.9 4.8
4.5 4.6 4.7
4.5
3.9
3.6
4
3
2.1
2
1
0
EAP
SA
ECA
MENA
SSA
LAC
3
Productivity is accelerating……..
Percent
Decomposition of GDP growth 2005-2015
(Average % 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
4
World trade as a driving force……..
Merchandise exports ($billion)
16,000
14,000
Other
developing
12,000
10,000
China
8,000
Other highincome
6,000
4,000
2,000
United States
0
1997
2000
2003
2006
2009
2012
2015
5
So Why Focus on Trade Facilitation?
Trade Facilitation
Human Development
Trade
GDP growth
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Trade Costs – NTB’s are a Threat



Slow global growth…….
Block business productivity, regional
integration, and efficient networks
Help to ensure continued poverty,
monopoly power, corruption, and
world insecurity
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Simple Statistic
Time Required for Exports (by Region)
Required Time for Exports (Days)
140
116
Min.
120
93
100
Max.
66
80
49
60
40
16
20
44
24
6
6
10
ECA
EAP
MENA
43
29
17
5
0
Africa
SA
LAC
Developed
Countries
“Trading on Time” (2006)
8
Costs and Benefits of Reform?

Results for trade and GDP gains:
• APEC: 1% (ICs) 2% (LDCs) shock to
import prices yields 3.3% increase in
exports
• UNCTAD: 1% cost reduction yields $3.3
billion in Asia.
• One day delay before shipping reduces
trade by 1% (country distancing from
trade partners by 85 km) Freund, et. al,
2006.
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Wilson, Mann, Otsuki (2004)
Building on APEC Trade Ministers Report
with Canada in 2002
Evaluate reform in the following:

1.
2.
3.
4.
Port Logistics (air and sea)
Customs Environment
Regulatory Environment
E-business usage (proxy for services infrastructures)
Creating Country-Specific Indicators
•
Consistency-- Country-specific information on a consistent
basis from multiple sources for each indicator
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Raising Capacity Half-way to
Global Average
$377 billion trade gain
Sources of Trade Expansion
Information
Technology
41%
Port
Efficiency
28%
Regulatory
Harmnization
10%
Source: Wilson, Mann and Otsuki (2004)
Customs
Environment
9%
11
What About Welfare Gains and
Aid Effectiveness?


How effective is trade-related lending
(infrastructure, trade development, and trade
policy) in lowering trade costs?
APEC members receive on average (1995-2004)
TF aid totaling:
• $5.3bn including China (35% world total)


APEC members contributed on average (19952004) TF aid totaling $8.6bn (56% world total)
OECD-DAC data
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Ivanic, Mann & Wilson
(forthcoming)

Preliminary results:
• Global welfare increase of $25 billion
with targeted “aid for trade facilitation.”
• Aid cuts trade costs overall by 0.3% -but some regions much more.
• More ahead….regional distribution of
gains, which type of aid more effective?
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Conclusions…….



Evidence indicates trade gains are driven
by raising capacity and reform in several
areas……but country priorities differ.
Collective action to raise lower barriers
can increase trade……but domestic reform
critical.
Concrete analysis needed to clarify
priorities for action ahead.
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Trade Policy Agenda

Doha Question mark



WTO Agreement a good small step
Progress on a plurilateral basis?
Wither Regionalism -- APEC?



Good tool for reform
Busan Business Agenda (2005) -- Further 5
percent cut in trade costs by 2010?
Need clarity on concrete and achievable
agenda.
15
Development Agenda


This is a most important agenda
Aid Effectiveness – what works and
why?
• Targeted or comprehensive framework
• Soft or hard infrastructure
16
Thank You
John S. Wilson
Lead Economist
The World Bank
[email protected]
http://econ.worldbank.org/projects/trade_costs
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