Foreign Trade, FDI, and Capital Flows Study
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Publication
Actual and Potential Trade Agreements in the Asia-Pacific: Estimated Effects
(World Bank, Washington, DC, 2019-10)This paper assesses and compares economic impacts of four actual and potential free trade agreements in the Asia-Pacific Region; Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, sometimes also called TPP-11), the original Trans Pacific Partnership (TPP-12), the Regional Comprehensive Economic Partnership (RCEP), and the Free Trade Area of the Asia-Pacific (FTAAP). FTAs with a larger scale and wider membership are expected to produce higher aggregate gains in terms of increased GDP and trade flows. U.S. withdrawal from TPP-12 reduced estimated GDP gains for the TPP-11 countries by about half. For countries belonging to CPTPP and also negotiating RCEP, the potential gains from an agreement with both China and Korea are substantial, but not as large as if the United States were to re-join TPP-12. On a sectoral basis, significant structural shifts are observed for such sectors as food processing, wearing apparel, textiles, and transport equipment. -
Publication
Modernizing Trade in Pakistan: Policy Reform Handbook
(World Bank, Washington, DC, 2019-09)This handbook intends to be a resource for those interested in trade policy reform, in Pakistan and elsewhere. It arose from the Pakistan trade and investment policy program (PTIPP). The PTIPP was designed to work on trade, competitiveness, and gender in Pakistan. This handbook focuses on two pillars of the PTIPP: trade policy and trade facilitation. The objective of the trade policy pillar was to develop a comprehensive medium-term regional trade strategy underpinned by high-quality analysis, in line with international good practice. The objective of the trade facilitation pillar was to reduce the time, cost, and documentation required to process exports and imports through key border posts, leading to a substantial increase in the volume of goods traded. To achieve these objectives, the PTIPP engaged with policy-making institutions, the private sector, including female entrepreneurs, and government to promote international trade, investment, gender equality, and regional integration. The authors focused on producing a document that not only lists results and recommendations but also guides the reader through how the analysis was conducted and how the recommendations were reached. This handbook also provides a set of guidelines for analyzing competitiveness in any country and shows how the lessons learned in Pakistan can apply to other economies. It will therefore be useful for teams conducting competitiveness analyses in other countries and regions. -
Publication
Ecuador Trade and Investment Competitiveness Report
(World Bank, Washington, DC, 2019-06)The internationalization of the Ecuadorian economy is necessary if the country is to successfully adopt a development model led by the private-sector. The Ecuadorian government is seeking to accelerate growth and sustain social progress by giving greater prominence to the private sector; it does at a time when external conditions are less favorable than at any time in the last decade. This report has three main objectives; to provide a systematic benchmark of Ecuador’s connection to the global economy, to identify key bottlenecks, and to make recommendations for enhancing the competitiveness of the private sector. The assessment is broken down into two sections. First, there is a section about international competitiveness outcomes, which assess Ecuador’s performance and identifies the challenges associated with connecting to international markets. The analysis looks at outcomes throughout the four competitiveness channels; that is, exports, imports, foreign direct investment (FDI), and global value chains (GVCs). The report’s second main section contains a competitiveness diagnostic about the key drivers behind the previously identified challenges and provides actionable policy recommendations to overcome them. The determinants are grouped in four mutually exclusive groups: (i) the macro and fiscal framework; (ii) the institutional and regulatory framework governing trade and investment; (iii) supply-side factors; and (iv) demand-side factors. -
Publication
Chad Growth and Diversification: Leveraging Export Diversification to Foster Growth
(World Bank, Washington, DC, 2019-05-30)This report describes the key policies for Chad to successfully leverage export diversification to foster economic growth. After several unsuccessful attempts at diversifying in the 1990s, Chad has deepened its dependence on commodities, mainly relying on oil; which came to replace cotton. However, the experience of other countries, in Africa and other parts of the world, shows that while large scale production of oil resources offers great opportunities, it comes with major shortcomings. Chad’s Vision 2030 is to become an emerging economy, driven by diversified and sustainable sources of growth. The goal is to triple the average GDP per capita at current prices, by increasing it from US$ 730 in 2014 to US$ 2300 in 2030, while drastically reducing the poverty rate from 46.7 percent in 2011 to 8 percent during the same period. Chad’s economy is overly dependent on crude petroleum, which makes it vulnerable to external shocks. Therefore, to achieve this development goal, only an export diversification strategy can foster a larger menu of goods and services than can become growth-accelerating and job-creating activities. Its implementation challenges are formidable, but the country has little choice, as the social unrest following recurrent oil price slumps, its burgeoning youth population and regional security threats may foment more violence in an already fragile and volatile economy and keep investors away. Hence, this report outlines a strategy to achieve this vision centered on the diversification of its non-oil economy (mainly agricultural-based exports) away from natural resource-based commodities. -
Publication
Pakistan: Unlocking Private Sector Growth through Increased Trade and Investment Competitiveness
(World Bank, Washington, DC, 2018-10)Evidence suggests that Pakistan has the potential for much faster and more diversified economic growth. Energizing trade can help Pakistan to realize its growth potential. Pakistan’s inward-oriented trade policies have had the effect of stalling Pakistan’s integration into regional and global value chains (GVCs). Pakistan’s failure to reform its trade policy to better foster export competitiveness can be attributed in part to institutional fragmentation within the government. This fragmentation has resulted in different agencies sometimes working at cross purposes. Efforts to reduce tariffs have been offset by the introduction of alternative protection instruments such as regulatory duties (RDs) and firm-specific special regulatory orders (SROs). In addition to tariffs, RDs and SROs, other obstacles to global integration include a heavy regulatory burden and perceived risks to investing and operating in the country, which have hurt efforts to attract foreign direct investment (FDI). Growth and competitiveness are also inhibited by inefficient trade facilitation policies, weak logistics services, and underdeveloped infrastructure. These constraints have made it difficult for Pakistan to fully exploit its proximity to China, a trade powerhouse, with which it has a free trade agreement. All in all, the anti-export bias of Pakistan’s trade policy has made it more difficult for outward-looking firms to grow by accessing global markets. A series of actions in the areas of trade policy, trade facilitation and connectivity, and institutional coordination could potentially stimulate Pakistan’s growth through increased trade and investment competitiveness. Integration with other countries in the region and neighboring regions, particularly East Asia, will allow Pakistan to diversify both its product basket and markets. Finally, full normalization of trade relations with India would allow Pakistan to benefit from India’s fast growth and promote complementarities, including valuechain activities and investment potential. -
Publication
CEMAC: Deepening Regional Integration to Advance Growth and Prosperity
(World Bank, Washington, DC, 2018-06-29)The Central African Economic and Monetary Community (CEMAC), which consists of Cameroon, the Central African Republic, Chad, the Republic of Congo, Equatorial Guinea and Gabon, is one of the oldest regional groupings in Africa. The main objectives for achieving this are: (i) the creation of a fully functional and effective customs union, (ii) the establishment of a robust system of macroeconomic surveillance, and (iii) the harmonization of sectoral policies and legal frameworks that will create a common market for goods, capital, and services.Despite this ambitious vision, regional integration in the CEMAC zone remains shallow.The oil price shock of 2014-15 severely affected the six CEMAC economies and promoted re-commitment to deepening regional integration.At the regional level, the PREF also aims to: (i) improve the coordination of public financial management (PFM) and fiscal policy; (ii) accelerate regional integration through improvements to the regional economic plan; (iii) improve the business climate; (iv) increase economic diversification; (v) enhance monetary policy transmission mechanisms; and (vi) improve prudential banking supervision.CEMAC is right to focus on reforms to deepening regional integration as a driver of growth.The objective of this Regional Study on CEMAC is to support policy makers in CEMAC in efforts to strengthen regional integration to support economic growth and to reduce the need for economic adjustment. The Regional Study focuses mainly on what can be done at the regional level to support regional integration, macro-stability and long-term growth in the CEMAC area; as such, the Regional Study aims to complement country-specific policies and initiatives to support macro-stabilization, economic development and integration. -
Publication
Mali Growth and Diversification
(World Bank, Washington, DC, 2018-03-14)This report describes the key policies for Mali to succeed leveraging growth with export diversification. For many decades, Mali has been a commodity-dependent country, mainly relying on gold and, to a lesser extent, cotton. However, the experience of other countries, in Africa and other parts of the world, shows that large scale production of minerals and oil resources offers great opportunities, but also presents major shortcomings. These are: tendency to growth beyond potential in cycles of booming prices; high GDP growth volatility that translates into a fragile fiscal stance; a resource curse that favors production of non-tradable goods; and a growth pattern biased toward rent-seeking activities, which prevents expansion of competitive activities creation of abundant and better jobs. Mali is no exception to this. Mali needs to structurally transform itself to accelerate growth and reach its vision, Mali 2025. The Government of Mali does not have a choice: without adequate jobs by 2025, Mali’s burgeoning youth population will foment more violence in an already fragile economy and keep investors away. Hence, it has outlined a strategy to achieve this vision centered on the diversification of its economy (and exports) away from natural resource-based commodities. -
Publication
Niger: Leveraging Export Diversification to Foster Growth
(World Bank, Washington, DC, 2017-12-09)Niger’s Vision 2035 acknowledges the country has little choice but to create ‘a competitive anddiversified economy.’ Economic diversification is a cornerstone component of the Economic Orientation Document (EOD) 2016-19 and the PDES 2017-21. The EOD defines Niger’s economic diversification as moving exports away from natural resources and increasing the value-added component of exports as the foundation for its agro-based industrialization and employment creation policies. Hence, an exports diversification strategy is akin to the country’s economic diversification and, not surprisingly, the PDES contains several axes of policy interventions supporting it. However, Niger faces serious structural challenges to diversify into new productive activities. The country is landlocked, exporting costs are high and, given multiple infrastructure and logistics gaps, access to markets is difficult beyond neighboring regional markets. Rapid population growth and low human capital turns into a low skilled population. Volatile economic growth, reliant on a few commodity exports that closely follow the vagaries of weather and boom and busts of international prices, makes hardly obtained poverty gains vulnerable. -
Publication
Investment Policy and Promotion Diagnostics and Tools: Maximizing the Potential Benefits of Foreign Direct Investment for Competitiveness and Development
(World Bank, Washington, DC, 2017-07-13)This paper presents a bird’s eye overview of the investment policy and promotion (IPP) logical framework developed by the trade and competitiveness global practice of the WBG to address the challenge of how countries can use foreign direct investment (FDI) to advance their economic development. The report sets out three key propositions: i.e. (i) that investment policy should aim not to choose between but connect domestic and foreign investors, (ii) that investment policy making should be based on the whole investment cycle going beyond promotion and (iii) that not all FDI is the same nor has the same development impacts. This sets out the logical framework for a concrete investment policy and promotion intervention in a time of globalization that will yield measurable results. -
Publication
Impact of the Libya Crisis on the Tunisian Economy
(World Bank, Washington, DC, 2017-02-01)This study assesses the main spillover effects of the Libyan crisis on the Tunisian economy and estimates the crisis’ overall social welfare and fiscal impacts on Tunisia. The authors consider four main effects on Tunisia: (i) the increased presence of Libyans in Tunisia (both short- and long-term), and the return of Tunisian workers from Libya; (ii) the level and dynamics of illicit informal trade and informal cash flows between the two countries; (iii) the deterioration of civil security in the region and its effects on private investment and tourism; and (iv) the increase in the Tunisian government’s security spending. The chapter is organized as follows. Section one describes the objectives of the investigation and methodology. Section two estimates the number of Libyans living in Tunisia (temporary and permanent) and their demographic characteristics. Section three analyzes the living conditions of Libyan households in Tunisia and provides an estimate of their poverty level. Section four analyzes the shocks to Libyan households, and those households’ adaptations and resilience in response to shocks. Section five discusses the migratory decisions of Libyan households, in particular their preference to either return to Libya or remain permanently in Tunisia.