Foreign Trade, FDI, and Capital Flows Study

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Chad Growth and Diversification: Leveraging Export Diversification to Foster Growth
(World Bank, Washington, DC, 2019-05-30) World Bank
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.
Niger: Leveraging Export Diversification to Foster Growth
(World Bank, Washington, DC, 2017-12-09) World Bank
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.
The Republic of Benin Diagnostic Trade Integration Study Update: From Rents to Competitiveness
(World Bank, Washington, DC, 2015-05) World Bank Group
The Government of Benin has requested an update of the 2005 Diagnostic Trade Integration Study and has asked the World Bank to take the leading role in this exercise. The update’s objectives are to (a) take stock of progress in the mainstreaming of trade in the government’s national development strategy and of implementation of the Action Matrix recommendations; (b) complement and deepen the analysis in selected areas; and (c) revise and update the Action Matrix to take account of the evolving context since 2006. The aim of the analysis is to assist the Government of Benin in defining an overall competitiveness strategy for inclusive, job-creating export-led growth in accordance with the key priorities identified in the 2013 Plan Stratégique de Développement du Commerce (PSDC), and to further mainstream trade into the general policy orientation defined by Benin’s key policy documents, including the Growth and Poverty Reduction Strategy Paper (GPRSP) update. The DTIS Update (DTISU) offers a diagnosis, analytical framework and action plan, giving trade expansion a key role in the reduction of poverty and vulnerability. As mandated by the Paris Principles, the DTISU’s approach is strongly aligned with the MICPME’s PSDC (Trade Development Strategy Plan, henceforth TDSP) and draws also from the diagnosis in the Government of Benin’s recent poverty assessment (INSAE 2014) as well as the 2011 update of the GPRSP. It emphasizes the linkages between poverty, jobs, and trade with two key objectives: (i) reducing poverty through trade-led growth, and (ii) reducing vulnerability.
Republic of Sudan Diagnostic Trade Integration Study Update: Reducing Trade Costs to Increase Competitiveness and Rresilience
(World Bank, Washington, DC, 2014-10-31) World Bank Group
The Diagnostic Trade Integration Study (DTIS) update identifies priority actions in support of the Government of Sudan (GOS) commitment to increase trade and diversify the economy. The current study builds on the earlier 2008 DTIS by identifying the major factors holding back the increase of agricultural exports and economic diversification. The report identifies a package of measures that will support Sudan to more effectively realize its economic potential. The DTIS Update presents an updated action matrix that summarizes the recommended policy reforms. This matrix was validated with a wide variety of stakeholders in Khartoum in September 2014. Together, the action points will contribute to reducing trade costs, thereby enabling Sudanese enterprises and farmers to compete more successfully in regional and global markets and realize the GOS objectives of expanding and diversifying exports for increased economic growth. The recommendations accept that any changes in tariff schedules should be ‘revenue neutral,’ given the existing challenging fiscal situation.
Chinese FDI in Ethiopia: A World Bank Survey
(World Bank, Washington, DC, 2012-11) World Bank
Chinese Foreign Direct Investment (FDI) into Africa is on the rise and Ethiopia is at the forefront of this trend. On request of the Government, the World Bank surveyed 69 Chinese enterprises doing business in Ethiopia with a 95-question survey in May/June 2012. The survey covered various aspects of the foreign direct investment climate in Ethiopia, including infrastructure, sales and supplies, land, crime, competition, finance, human resources, and questions about general opportunities and constraints for doing business in Ethiopia. This report summarizes the results of survey and provides policy suggestions in light of the analysis; the report also provides some broader background of the expected benefits of FDI into Ethiopia as well as current policies and approaches to promote incoming investment. Addressing identified obstacles could help Ethiopia to take better advantage of foreign investors in order to accelerate the shift from a predominantly low-productivity agriculture-based economy towards a higher-productivity manufacturing and export-based economy. Experiences in successful countries around the world, and especially East Asia show that foreign investment is instrumental to facilitate such a structural transformation and to maintain sustained and broad-based economic development. This study recommends five main areas for policy adjustments to facilitate foreign investors coming into Ethiopia: adjust customs clearance procedures and trade regulations; facilitate currency convertibility and increase transparency of the exchange rate policy; improve tax administration consistency and efficacy; execute impartial labor regulation; and increase the supply and quality of skilled workers.
Reshaping Economic Geography of East Africa : From Regional to Global Integration, Volume 2. Technical Annexes
(Washington, DC, 2012-06) World Bank
Five East African countries Burundi, Kenya, Rwanda, Tanzania, and Uganda have made solid progress on integrating regionally in the East African Community (EAC) since 1999. Such advances are crucial, as integration in East Africa has the potential for higher than usual benefits: Burundi, Rwanda, and Uganda are landlocked, with very high costs to their economies. Successful integration will transform the five countries into one coastal, regional economy, slashing such costs. Looking at the East African integration through the lens of economic geography helps to improve sequencing of the integration process and to develop new policies to complement ongoing efforts, maximizing their benefits. Reducing disparities in provision of social services will increase the chances of workers from the inland parts of the EAC to find jobs, especially as administrative obstacles to labor mobility are being removed under the Common Market Protocol. Implementing and deepening the current program of regional infrastructure improvements will ensure that consumers and producers throughout the region are better connected to each other and to global markets. Integration policies facilitating greater economic activity in the coastal areas will help the EAC take advantage of the global demand for manufactured goods and thus to promote employment. That will also generate substantial demand for services and agricultural goods produced inland, amplifying the benefits of the customs union.
Reshaping Economic Geography of East Africa : From Regional to Global Integration (Vol. 1 of 2)
(Washington, DC, 2012-06) World Bank
Five East African countries Burundi, Kenya, Rwanda, Tanzania, and Uganda have made solid progress on integrating regionally in the East African Community (EAC) since 1999. Such advances are crucial, as integration in East Africa has the potential for higher than usual benefits: Burundi, Rwanda, and Uganda are landlocked, with very high costs to their economies. Successful integration will transform the five countries into one coastal, regional economy, slashing such costs. Looking at the East African integration through the lens of economic geography helps to improve sequencing of the integration process and to develop new policies to complement ongoing efforts, maximizing their benefits. Reducing disparities in provision of social services will increase the chances of workers from the inland parts of the EAC to find jobs, especially as administrative obstacles to labor mobility are being removed under the Common Market Protocol. Implementing and deepening the current program of regional infrastructure improvements will ensure that consumers and producers throughout the region are better connected to each other and to global markets. Integration policies facilitating greater economic activity in the coastal areas will help the EAC take advantage of the global demand for manufactured goods and thus to promote employment. That will also generate substantial demand for services and agricultural goods produced inland, amplifying the benefits of the customs union.
Africa’s Trade in Services and Economic Partnership Agreements
(World Bank, 2010-07-20) World Bank
Trade can play a crucial role in the development of services sectors in Africa. Services offer new dynamic opportunities for exports, especially for land-locked countries, while opening up to imports of services and foreign direct investment is a key mechanism to increase competition and drive greater efficiency in the provision of services in the domestic economy. Lower prices, higher quality and wider access to services raises productivity improves competitiveness and is critical for poverty reduction. But trade opening may need to be coordinated with regulatory reforms, to ensure efficient outcomes, while additional policies may be required to ensure that public policy objectives regarding equity are achieved. This places emphasis on the capacity to define and implement sound regulatory policies for services sectors, capacity that is limited in many African countries. Regulatory and trade reforms in Africa need to be supported with technical and financial assistance. Such assistance should be available to all African countries that wish to reform their services sectors, whether they negotiate and sign an Economic Partnership Agreement (EPA) or not. An independently managed fund for services trade reform in Africa, organized around common priority sectors, that would allocate resources to support implementation of reforms and consultants according to expertise, not nationality, will be the most appropriate vehicle for providing technical assistance and building capacity.
Patterns of Foreign Direct Investment Flows and Trade-Investment Inter-Linkages in Southern Africa : Linking Middle-Income and Low-Income Neighbors
(World Bank, Washington, DC, 2010-05) Isik, Gozde; Yoshino, Yutaka
This report discusses the patterns of foreign direct investment flows and trade-investment inter-linkages in Southern Africa. It will discuss how cross-border investment flows create a possible channel of growth spillover from South Africa and other MICs to LICs in the subregion, and identify the roles of subregional trade and investment flows in generating these neighborhood effects with LICs. After an introduction with background on the subregion of Southern Africa, Section 2 provides facts on the patterns of trade in Southern African countries to illustrate how much (or little) the Southern African subregion is integrated today and whether or not intraregional trade is growing. Section 3 presents aggregate trends in foreign direct investment flows (and stocks) in SSA, discusses how SASR is situated in such trends, and analyzes the emerging trends of intra-SASR cross-border investments, largely driven by South Africa. Section 4 analyzes trade-investment linkages in Southern Africa at the firm level. Section 5 discusses areas of domestic policies in enhancing trade and foreign direct investment in Southern Africa. Section 6 summarizes the findings from this analysis and discusses their policy implications.
Burkina Faso : The Challenge of Export Diversification for a Landlocked Country
(Washington, DC, 2007-09) World Bank
The objective of the Diagnostic Trade Integration Study (DTIS) is to build the foundation for accelerated growth by enhancing the integration of its economy into regional and global markets. Burkina Faso is one of the best economic performers in West Africa, yet its integration into the world economy, as measured by its trade and foreign investment performance, is among the lowest. Economic growth has been strong, higher than all other countries in the sub-region. This has been achieved in spite of droughts and cricket invasions, and the turmoil in Cote d'Ivoire, and without significant oil or mining exports. Macroeconomic management has been consistently strong, and inflation low. At the same time, its export to gross domestic product (GDP) ratio is only one-third that of Senegal or Mali, while foreign directs investment inflows are far below the average for sub-Saharan Africa. At a time when globalization is determining the fate of nations, Burkina Faso seems to be on the sidelines and doing fairly well. If the country is to raise economic growth rates to the levels necessary to make major inroads on poverty, and reduce its aid dependence, it will need to improve its performance on exports and foreign investment. Implementation of a weighing program to fight against overloading of merchandise, coordinated along all the corridors.The challenge for Burkina Faso is to step up efforts to consolidate this sound performance in order to accelerate growth and deepen the fight against poverty. These efforts will be deployed on three fronts. The first consists in maintaining macroeconomic stability to improve the international competitiveness of the economy; the second, diversifying exports to expand trade and stimulate growth; and the third, strengthening social sectors and small operators in order to make growth inclusive and to maximize its impact on poverty reduction. This study focuses on the second challenge, taking into account the importance of participation by small operators.