Foreign Trade, FDI, and Capital Flows Study
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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. -
Publication
Mobilizing the Middle East and North Africa Diaspora for Economic Integration and Entrepreneurship
(World Bank, Washington, DC, 2016-12)This paper advocates for the need to rally the MENA professional and skilled diaspora. It discusses the findings of a unique outreach exercise to the MENA diaspora and provides policy recommendations. First, the paper highlights the linkages between the diaspora and trade, investment, and knowledge transfer based on the literature and concrete examples. Second, it describes the outreach and the profile of the diaspora members surveyed. Third, it presents the main findings of the survey of the MENA diaspora in four areas: (i) overall engagement, (ii) appetite for investment, (iii) trade, and (iv) the role of institutions. The paper concludes with policy recommendations. -
Publication
The Impact of the Syrian Conflict on Lebanese Trade
(World Bank, Washington, DC, 2015-04)The devastating civil war in Syria is arguably one of the major civil conflicts in recent times. The conflict started with protests in March 2011 and soon after escalated to a violent internal war with no end in sight to this date. The conflict has by the end of 2014 caused well in excess of 150,000 fatalities, and 6 million internally displaced people (UN), and led 3 million refugees to move out of the country (UNHCR). Beyond the human tragedy, the conflict has disrupted the functioning of the economy in many ways. It has destroyed infrastructure, prevented children from going to school, closed factories and deterred investments and trade. The economic effects of the war extend beyond the country’s borders affecting also the neighboring countries. In particular trade is one of the main channels through which the effects of the crisis are transmitted to neighboring countries. For example, the demand for goods and services in Syria is likely to have fallen thus affecting the many exporters to Syria in neighboring countries. Moreover, to the extent that Syria has become harder to cross, the war may have made trade through Syria more difficult. At the same time producers in neighboring countries may have replaced Syrian producers in Syria and in other markets as their productive assets in Syria were destroyed. This report examines the effects of the Syrian war on the Lebanese economy via one of the most important channels through which the economic impact of the war occurs, i.e. the trade channel. In doing so, it partly updates and extends the previous economic assessment of World Bank (2013b) carried out last year. Focusing specifically on trade allows us to examine in more depth the trade effects than that report was able to do. Indeed, we go beyond the effects on aggregate and sectoral imports and exports to also examine the effects on exports at firms’ level, comparing the effects in Lebanon with those in other neighboring countries, including Jordan, Turkey and Iraq. -
Publication
Algeria-Mali Trade: The Normality of Informality
(World Bank, Washington, DC, 2015-03-22)This paper estimates the volume of informal trade between Algeria and Mali and analyzes its determinants and mechanisms, using a multi-pronged methodology. First, the authors discuss how subsidy policies and the legal framework create incentives for informal trade across the Sahara. Second, the authors provide evidence of the importance of informal trade, drawing on satellite images and surveys with informal traders in Mali and Algeria. The authors estimate that the weekly turnover of informal trade fell from approximately United States (U.S.) 2 million dollars in 2011 to U.S. 0.74 million dollars in 2014, but continues to play a crucial role in the economies of northern Mali and southern Algeria. Profit margins of 20-30 percent on informal trade contribute to explaining the relative prosperity of northern Mali. The authors also show that official trade statistics are meaningless in this context, as they capture less than 3 percent of total trade. Finally, the authors provide qualitative evidence on informal trade actors and mechanisms for the most frequently traded products. -
Publication
From Political to Economic Awakening : The Path of Economic Integration - Deauville Partnership Report on Trade and Foreign Direct Investment, Volume 2. Main Report
(Washington, DC, 2012-05)The forces unleashed by the Arab political awakening have the power to be transformational. One critical parameter of success will be whether the Arab political awakening is accompanied by a concurrent economic awakening. Economic integration through increased trade and foreign direct investment (FDI) is one key means available in the short to medium term to policy makers to put the Partnership countries on a higher path of sustainable economic growth and in a position to decisively tackle the problem of unemployment, especially youth unemployment. To be sure, skepticism abounds in the region over the merits of trade and FDI and the integrity of the private sector in light of "crony capitalism," where the benefits of past policies are perceived to have accrued only to a well-connected few. Leadership is needed in both Partnership countries and Deauville partners to provide a credible long-term vision and explain the mutual benefits of economic integration. One such powerful vision could be the pursuit of a partnership aimed at gradually promoting four key freedoms in the Mediterranean and beyond: the free movement of goods, services, capital, and eventually persons. The implementation of far-reaching domestic reforms in Partnership countries will be critical to effectively reap the growth and employment opportunities offered by greater economic integration and regulatory convergence with the most advanced economies. To further enhance trade and FDI and to achieve the vision of an Arab world more integrated into global markets, the trade and commerce pillar of the Deauville Partnership could therefore focus on four overarching priority areas of reforms and support: (a) improve market access opportunities and market regulations; (b) foster competitiveness, diversification, and employment; (c) facilitate trade and mobilize trade finance and diaspora resources; and (d) promote the inclusiveness, equity, and sustainability of the structural transformation brought about by the process of integration. -
Publication
From Political to Economic Awakening in the Arab World : The Path of Economic Integration - Deauville Partnership Report on Trade and Foreign Direct Investment, Volume 1. Overview Report
(Washington, DC, 2012-05)The forces unleashed by the Arab political awakening have the power to be transformational. One critical parameter of success will be whether the Arab political awakening is accompanied by a concurrent economic awakening. Economic integration through increased trade and foreign direct investment (FDI) is one key means available in the short to medium term to policy makers to put the Partnership countries on a higher path of sustainable economic growth and in a position to decisively tackle the problem of unemployment, especially youth unemployment. To be sure, skepticism abounds in the region over the merits of trade and FDI and the integrity of the private sector in light of "crony capitalism," where the benefits of past policies are perceived to have accrued only to a well-connected few. Leadership is needed in both Partnership countries and Deauville partners to provide a credible long-term vision and explain the mutual benefits of economic integration. One such powerful vision could be the pursuit of a partnership aimed at gradually promoting four key freedoms in the Mediterranean and beyond: the free movement of goods, services, capital, and eventually persons. The implementation of far-reaching domestic reforms in Partnership countries will be critical to effectively reap the growth and employment opportunities offered by greater economic integration and regulatory convergence with the most advanced economies. To further enhance trade and FDI and to achieve the vision of an Arab world more integrated into global markets, the trade and commerce pillar of the Deauville Partnership could therefore focus on four overarching priority areas of reforms and support: (a) improve market access opportunities and market regulations; (b) foster competitiveness, diversification, and employment; (c) facilitate trade and mobilize trade finance and diaspora resources; and (d) promote the inclusiveness, equity, and sustainability of the structural transformation brought about by the process of integration. -
Publication
Calculating Foreign Direct Investment in the Information and Communication Technology Sector in Egypt
(World Bank, Washington, DC, 2011-01-11)This report is part of an ongoing study of the measurement of foreign direct investment (FDI) in the information and communication technology (ICT) sector of Egypt's economy. This report forms part of the second amendment to a reimbursable technical assistance (RTA) program delivered by the Global Information and Communication Technology (GICT) department of the World Bank to the Information Centre of the Ministry of Communication and Information Technology (MCIT-IC) of the government of Egypt. This report outlines the results of a several visits to the region, a survey conducted, and methods of data collection. The objectives were: to analyze the new results of the FDI questionnaire and make recommendations to refine the methodology and sampling framework; to generate an estimate of the true level of FDI in Egypt's ICT sector, and to continue work towards establishing an ongoing process for the regular data collection and reporting of FDI data by providing training and relevant tools, in collaboration with relevant ministries and other institutions. -
Publication
Deepening Trade Reforms in Syria for Improving Competitiveness and Promoting Non-Oil Exports
(Washington, DC, 2010-09)Syria made promotion of non-oil exports one of the main objectives of its development strategy to counter the emerging twin balance of payments and fiscal deficits resulting from secular decline of oil production and exports. To realize this objective, the Government has implemented a number of trade policy reforms and took complementary measures in other policy areas during the 10th five-year plan to improve competitiveness of Syrian products in international markets. Non-oil exports responded strongly to the policy improvements. There is now a wide recognition of the need for further reforms to maintain this momentum. This paper tried to assess the achievement so far, identify the remaining gaps in the trade regime, and recommend follow up measures for broadening and deepening the trade reforms. The principal recommendations are presented in the attached policy matrix. The objective of export incentives is to reduce the costs of exported products with policy instruments consistent with World Trade Organization (WTO) rules. -
Publication
A Regional Virtual Market Place for Middle East and North Africa : Milestone Report
(Washington, DC, 2010-09)The Regional Virtual Market Place (RVMP) is an innovative project aiming at fostering regional economic growth and integration in the Middle East and North Africa (MENA) region as well as its integration with the rest of the world. In concrete terms, the RVMP will link buyers and sellers from the MENA region through an electronic platform, a website. The clients of such a platform would be firms that cannot afford to market their products abroad (participation to trade fairs, advertising, and hiring export consultants) or to conduct costly market research to identify business opportunities. Small and Medium Enterprises (SMEs) are considered to be the main target of this initiative. A RVMP will be the adequate tool to promote their products, at low cost, in international markets and learn about clients expectations through their posted requests (for instance: a pharmaceutical SME in Belgium looking for some North African plants' oil extracts with some specific characteristics will be able to post a request through the platform). This RVMP would be likely to address the persistent market failure of access to markets by providing a virtual platform for North-South and South-South trade. It will also address information asymmetries by providing the sellers with information about the buyers' expectations and the buyers with information about the seller's trustworthiness (through ratings provided by previous buyers, similar to the eBay system, or trustworthy national institutions like chambers of commerce). -
Publication
Improving Export Incentives and the Free Zone System in Syria
(World Bank, Washington, DC, 2010-06)This paper aims to review the export incentives currently implemented in Syria including the free zone system, identify the main weaknesses, and suggest measures to strengthen them. In particular, drawing on the best practices around the world, it explores ways to introduce a duty and tax relief scheme, manufacturing under bond arrangements, and an export processing zone system in Syria's trade regime, and to re-orient the free zones to maximize their contribution to the Syrian economy. The rest of the paper is organized as follows: section two makes a case for development of an effective export incentive system to eliminate the anti-export bias in Syria's trade regime and foster its international competitiveness. Section three provides a summary of the main instruments of export incentives that are widely used worldwide and will be appropriate for Syria to implement. Section four reviews the export incentives currently implemented and identify its weaknesses. Based on the discussions in sections three and four, section five suggests options for Syria to strengthen its export incentive policies. The final section presents the main conclusions and proposes steps for moving forward.