Foreign Trade, FDI, and Capital Flows Study

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Digital Pakistan: A Business and Trade Assessment

2020-05, Saez, Sebastian, van der Marel, Erik

This report analyses the recent trends in Pakistani Information Technologies (IT) and InformationTechnologies enabled Services (ITeS), as well as obstacles confronted by firms. The authors assess the importance of trade costs as a barrier to services growth and development in Pakistan’s domestic market and to seizing the opportunities of global trade. The report also aims to understand and examine the impact of obstacles (i.e., trade costs) confronted by firms. These obstacles increase the costs of selling services and may reduce capacity to compete both in the local market (Pakistan) as well as overseas (exports). These obstacles include direct costs generated by policy barriers that limit market entry, but can also include infrastructure deficiencies, geographical location, and institutional capacities, and/or obstacles imposed by regulatory measures. Among the latter obstacles, examples include difficulties in accessing the information necessary to operate in a market, the predictability and stability of the business environment in a market, and the quality of the decision-making process and administrative procedures of competent authorities in the domestic and export markets. The focus of the report is the trade costs confronted by IT and ITeS firms. IT and ITeS operations are the backbone to provide digital services, digital goods and depend on digital technologies, conform an integral part of the overall ecosystem. The report relies on a survey conducted on 782 IT and ITeS firms across different cities. The objective of the survey was to examine the importance of these factors for Pakistani firms and to provide advice to policymakers. To complement the survey results, the main findings were discussed in focus group structured interviews. Firms interviewed covered different services activities beyond software companies and included both exporters (534 firms) and non-exporters (248 firms), reflecting the export competitiveness as well as domestic competitiveness of Pakistan's IT services sector. The analysis aims to improve our understanding of Pakistan's IT performance and the obstacles confronted in this field.

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Services and Manufacturing Linkages: An Empirical Analysis for Lao PDR

2016-02, World Bank Group

This report seeks to shed light on the ways in which the services sector has contributed to Lao PDR’s competitiveness and integration into the global marketplace. It focuses on two complementary roles that the services sector plays: first, as an avenue for export diversification and growth and, second,by providing inputs into other productive sectors of the economy, such as the manufacturing sector. As economies grow, the importance of the services sector generally increases, but its role as an enabler of other sectors of the economy in moving up the value chain is frequently overlooked. However, the services sector is critical in raising competitiveness of these other sectors to boost growth and create better quality jobs. The main policy recommendations that emerge from this report are aimed at increasing competition in the services sector, reducing distortive regulations, and opening up the sector to foreign participation, building up skills, both at the individual and at the firm level, and investing in hard and soft infrastructure to promote the development of the sector.

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The Gambia -- Policies to Foster Growth: Volume 2. Macroeconomy, Finance, Trade and Energy

2015-05-19, World Bank

While mixed, there has also been progress in the areas of public sector, economic and fiscal management, civil service and justice reform, anti-corruption and public procurement reform. However, The Gambia remains vulnerable to external shocks as the main sources of domestically generated foreign exchange come from tourism and re-export trade whose fate depend largely on exogenous factors. In addition, a major part of the labor force is engaged in farming, and agriculture is vulnerable to weather conditions.

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Moldova Trade Study: Note 4. The Performance of Free Economic Zones in Moldova

2016-03-03, World Bank

In 1995, Moldova introduced free economic zone (FEZ) legislation with the aim of accelerating socioeconomic development by attracting domestic and foreign investment, promoting exports, and creating employment. Since then, seven free economic zones offering tax and customs benefits have been established. This note assesses the static and dynamic economic benefits of the program in Moldova. The free economic zones have been successful in attracting investment from both domestic and foreign sources. The economic zones have become true export platforms, generating a five-fold increase in exported industrial production from the zones between 2004 and 2014. On average, employment in the economic zones had a robust growth in the last seven years and almost doubled since 2008. Evidence suggests that the economic zones have significantly contributed to the diversification of exports and to the changing structure of the Moldovan economy. The effect of the economic zones on domestic firms appears to be modest, however, and unlikely to contribute to the technological upgrading and sophistication of the Moldovan economy. Free economic zones tend to attract industrial activities requiring intensive use of human resources for certain operations. The economic impact of Moldovan free economic zones is ambiguous. Moldovan legislation provides sound and transparent provisions, but the main issue is how this legislation is implemented. The majority of recommendations are focused on streamlining the implementation process, making it easier for companies to operate. Here are the main recommendations for improving the zones : (i) the importance of fiscal incentives should be downgraded by shifting to targeted services for businesses; (ii) reduce corruption and increase accountability by establishing one-stop-shop procedures and elements; (iii) establish a proper mechanism for monitoring and reporting with the zones residents and administrator; (iv) empower the regulator with additional relevant institutional capacities and capabilities; (v) the role of residents in appointing the administrator should be determinant; and (vi) establish a proper mechanism for compensating residents of the zones for restrictive treatment of the real assets.

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Moldova Trade Study: Note 1. Analysis of Trade Competitiveness

2016-01-30, World Bank

As a small economy, Moldova’s growth and development prospects are closely related to its performance in international and regional markets. In this report the authors have looked at the export performance and competitiveness of the Moldovan economy. This report provides an overview of Moldova’s trade competitiveness. Its objectives are twofold: (i) to present a comprehensive analysis of Moldova’s recent trade performance and (ii) to identify policy measures and interventions that can enhance the competitiveness of Moldova’s export firms and the value added of their exports. The report is divided into two main parts. Part one contains an exports outcome analysis. It assesses export performance along four dimensions that contribute to form a comprehensive picture of the sustainable competitiveness of the export sector, including (i) the level, growth, and market share performance of existing exports (the “intensive margin”); (ii) diversification of products and markets (the “extensive margin”); (iii) the quality and sophistication of exports (the “quality” margin); and (iv) the survival of export flows (the “sustainability margin”). Part two investigates constraints on Moldova’s competitiveness, focusing specifically on a series of supply-side factors, such as the role of backbone and input services and utilities, and access to finance; and the business environment, particularly government regulations affecting trade and governance and institutional quality. The rest of the report is structured as follows: Section two examines overall trends in trade flows, including the growth of exports and imports, the degree of trade openness, and the recent evolution in foreign direct investment flows. In Section three, the authors concentrate on export outcomes, analyzing the sectoral composition, the growth orientation, and degree of diversification of Moldovan exports. The authors also analyze the evolution in the quality and sophistication of exports and the survival of export relationships in different markets and sectors. In the second part of the report, the authors look at productivity dynamics of Moldovan firms in comparative perspective, and then investigate the impact of access to finance, backbone services, trade and customs regulations, and corruption on firm productivity. The authors conclude this report with policy recommendations to improve Moldova's export competitiveness and increase the product and market scope, quality, and sophistication of its export basket.

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Algeria-Mali Trade: The Normality of Informality

2015-03-22, Bensassi, Sami, Brockmeyer, Anne, Pellerin, Matthieu, Raballand, Gael

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.

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Competitiveness of the Kyrgyz Economy in the Wake of Accession to the Eurasian Customs Union: Selected Issues and Opportunities

2016-03, Choi, Jieun

This report explores the sectors that will be instrumental for positive CU impact and competitiveness in the medium term. The initial chapter analyzes the gaps and opportunities the Kyrgyz NQI presents for capturing benefits of access to the enlarged common market across sectors. The next three chapters take an in-depth look at three high-growth sectors and identify adaptation priorities and opportunities. Agriculture, services, and garments are a large and growing share of exports and are the sectors most likely to be transformed by accession to the CU and the increased tariffs to countries outside the EEU. Services added 56 percent to GDP in 2013, while agriculture contributed 18 percent, and manufacturing 16 percent. Exports in the garment sector were close to US$200 million in 2013, employing over 150,000 workers. The main findings of each chapter are summarized below followed by a summary of recommendations. This report is relevant to the Kyrgyz experience as it highlights important differences both in terms of regulations and technical requirements. The report highlights differences between the EU and CU regulatory systems in approaches to food safety and legislation, but it also analyzes the differences in infrastructure aspects of the NQI, such as testing laboratories and certification mechanisms between the EU and CU. The Customs Union approach is based on end-product compliance to a specific technical regulation or standard, whereas the European Union relies on preventive measures and minimizing risks associated with each process throughout the complete food chain. In the CU food control system, food control bodies verify that the end-product meets the required technical specifications established by the government; in the EU system, end-product attributes such as size, color, shape, smell, and taste are generally left to the marketplace to judge if they are acceptable. Importantly, the report pinpoints specific technical requirements for EU food safety that differ from the CU requirements (microbiological criteria for foodstuff, contaminants in food; maximum residue limits for residues of pesticides, and pharmacologically active substances).

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Moldova Trade Study: Note 2. Is the DCFTA Good for Moldova? Analysis of Moldova’s Trade Options Using a Dynamic Computable General Equilibrium Model

2016-01-30, World Bank

Moldova’s recent Association Agreement with the European Union (EU), which includes a Deep and Comprehensive Free Trade Agreement (DCFTA), represents an important opportunity, as well as challenges. This analytical document has been commissioned by the World Bank Group to provide insights into potential outcomes of the DCFTA and of other trade options that Moldova has, using a Dynamic Computable General Equilibrium (DCGE) model calibrated to its economy. This paper begins by describing the general trends in economic relations between Moldova and the EU over the past 10 years, with an emphasis on trade, as well as Foreign direct investment (FDI) and labor migration. This section includes some additional facts and details that complement the Trade Competitiveness Diagnostic. In the second section, the paper presents the main elements of the DCFTA and highlights the trade commitments and concessions that the EU and Moldova undertook. It also includes a short review of available literature on the ex-ante or ex post impact assessments of other Association Agreements between the EU and third countries that have been done using CGE models. The third section presents key features of the DCGE and discusses the data used for assembling the Social Accounting Matrix (SAM). Then, the main features of the simulated trade scenarios are presented. Finally, this paper discusses the DCGE simulation results, including the effects of the various scenarios on welfare, trade, and economic activity level. Some distributional impacts are also brought into discussion. The final section concludes and makes several recommendations.