Transcript Presentation - World Trade Organization

Aid for Trade:
Mainstreaming Trade
Richard Newfarmer
Special Representative to the WTO and UN
World Bank
Geneva
WTO Aid for Trade Meeting
November 19, 2007
Should trade receive greater attention in national
development strategies? …Yes, in most countries
Average ratio of exports / GDP
60.0%
50.0%
High Performing 13
[N=13]
40.0%
MICs [N=44]
30.0%
LDCs [N=37]
20.0%
10.0%
Source: Bank staff calculations based on data from World Economic Outlook
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
19
90
0.0%
LDCs’ share of the global market is stagnant, and
competitiveness has lagged
Total share in world exports of goods
25.0%
20.0%
High Performing 13
[N=13]
15.0%
10.0%
MICs [N=44]
5.0%
LDCs [N=37]
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
19
90
0.0%
High performing countries are the 16 fastest growing, non-oil countries over the 25 year period, 1980-2005; here we exclude three
high performing LDCs (Burkina, Cambodia and Uganda), and remaining 13 are: Botswana, Chile, China, India, Indonesia, Korea
(Rep.), Malaysia, Mauritius, Pakistan, Singapore, Sri Lanka, Taiwan, Thailand. Averages are unweighted to eliminate effects of
country size. LDCs include 3 high performers, but exclude 12 of the 49 LDCs for which data are not available.
Improving competitiveness goes beyond trade ministry…
and includes trade-related institutions
Average Days to Export and Import in 2005
Days
50
40
LDC (N=41)
MIC (N=64)
HP13 (N=13)
LDCs
30
MICs
HPs
20
10
0
Average time to export
Source: Bank staff calculations based on data from Doing Business Report 2006.
Average time to import
Improving competitiveness goes beyond trade ministry…
and includes trade-related institutions... And
infrastructure
Internet Price in 2005
(USD per month)
USD
$50
LDC (N=43)
MIC (N=69)
HP13 (N=13)
$40
LDCs
$30
$20
$10
$0
Source: Bank staff calculations based on data from WDI.
MICs
HPs
Improving competitiveness goes beyond trade ministry…
and includes trade-related institutions... And
infrastructure
Average Number of Electrical Outrages (days)
Days
80
LDC (N=20)
MIC (N=37)
HP13 (N=13)
60
40
20
0
Source: Bank staff calculations based on the latest data available from Enterprise Surveys.
Ways to make trade more central to development
strategies?

Country awareness that competitiveness matters – for growth and poverty
reduction
 Importance of openness – to drive productivity growth
• Exports provide wider markets and economies of scale
• Imports provide lower cost inputs, embodied technology and
competition
• Movement of people provides access to greater skills
• Easing restrictions on financial flows can lead to increases in
investment and in technology
 Investors, including domestic ones, have a choice of location…

Governments have to develop their own strategies and integrate into
national development programs
 Some country-specific combination of liberalization + complementary
policies

Competitiveness requires that the whole economic cabinet be involved -and eventually private sector and civil society involvement
Three elements to improve competitiveness…


Improving incentives to private investors to move resources to
more productive activities… tariffs, taxes, business regulations
Up-grading services industries: telecoms, air transport, ports,
energy
Index of connection costs
100
90
80
70
60
50
40
30
20
10
0
Mauritius
Shanghai
India
Prague
Three elements to improve competitiveness…



Improving incentives to private investors to move resources to
more productive activities
Up-grading services industries: telecoms, air transport, ports,
energy
Adopting pro-active policies to help firms and labor adjust
Aid for Trade
Report
Government Program (June 2006)
Development Policy Loan $30 m.
(Conditionality is govt program)
Co-financing: French Agency for
Development $30 m.
Investment Lending
Technical Assistance
Key lessons from experience in aid for trade ….
•
Improving competitiveness is central to achieving high
and sustained growth rates – and has to be made a
pillar of national development strategies
•
Aid for trade can help, but country ownership of the
competitiveness agenda is critical success
•
The role of the Bank and donors role is to support
government programs with diagnosis and finance.
References



Brenton and Newfarmer (2007) “Watching more than the Discovery Channel:
Export Cycles and Diversification in Development,” World Bank Policy
Research Working Paper 4343.
World Bank Mauritius– From Preferences to Global Competitiveness Report
of the Aid for Trade Mission, April 2006.
World Bank/IMF “Aid for Trade: Harnessing the Global Economy for
Economic Development” Paper prepared for the Development Committee,
October 2007
Aid for Trade:
Mainstreaming Trade
Richard Newfarmer
Special Representative to the WTO and UN
World Bank
Geneva
WTO Aid for Trade Meeting
November 19, 2007