Foreign Trade, FDI, and Capital Flows Study

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  • Publication
    Vietnam: Deepening International Integration and Implementing the EVFTA
    (World Bank, Hanoi, 2020-05-01) World Bank
    Following from Vietnam’s ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in late 2018 and its effectiveness from January 2019, and the European Parliament’s recent approval of the European Union-Vietnam Free Trade Agreement (EVFTA) and its subsequent planned ratification by the National Assembly in May 2020, Vietnam has further demonstrated its determination to be a modern, competitive, open economy. As the COVID-19 (Coronavirus) crisis has clearly shown, diversified markets and supply chains will be key in the future global context to managing the risk of disruptions in trade and in supply chains due to changing trade relationships, climate change, natural disasters, and disease outbreaks. In those regards, Vietnam is in a stronger position than most countries in the region. The benefits of globalization are increasingly being debated and questioned. However, in the case of Vietnam, the benefits have been clear in terms of high and consistent economic growth and a large reduction in poverty levels. As Vietnam moves to ratify and implement a new generation of free trade agreements (FTAs), such as the CPTPP and EVFTA, it is important to clearly demonstrate, in a transparent manner, the economic gains and distributional impacts (such as sectoral and poverty) from joining these FTAs. In the meantime, it is crucial to highlight the legal gaps that must be addressed to ensure that national laws and regulations are in compliance with Vietnam’s obligations under these FTAs. Readiness to implement this new generation of FTAs at both the national and subnational level is important to ensure that the country maximizes the full economic benefits in terms of trade and investment. This report explores the issues of globalization and the integration of Vietnam into the global economy, particularly through implementation of the EVFTA.
  • Publication
    Reaping Benefits of FDI and Reshaping Shanghai's Economic Landscape
    (Washington, DC, 2011-01) World Bank
    Foreign Direct Investment (FDI) has played a significant and positive role in driving economic growth and upgrading economic structure in Shanghai. The shift in the pattern of FDI over the last decade towards services has been particularly crucial. Given its importance, Shanghai municipal government may continue to devote efforts to attract FDI and have foreign funded enterprises help reshape Shanghai's economic landscape. The main importance of FDI to Shanghai lies less in its capital finance, and more in the extent to which foreign funded enterprises (FFEs) help move the city up the value chain and generate high-end jobs. In the post-financial crisis era, developing countries will take a much larger role in leading world growth while enhanced competition will accelerate the pace of service revolution. Possessing strong geographic advantages, Shanghai has the potential to become an international business and financial hub and to have the high-tech industries and services being the driving force of the growth. Shanghai has strong potential in reaping the benefits of FDI and reshaping its economic landscape in 12th Five Year Plan period. In terms of the three conditions to succeed good opportunity, favorable geographic location and harmonious society, Shanghai is already in a good position. This note seeks to provide insights to help the Shanghai government make the right decisions and trade-offs to better reap the benefits of FDI in the context of a changing global context.
  • Publication
    Boom, Bust and Up Again? Evolution, Drivers and Impact of Commodity Prices: Implications for Indonesia
    (World Bank, Jakarta, 2010-12) World Bank
    Indonesia is one of the largest commodity exporters in the world, and given its mineral potential and expected commodity price trends, it could and should expand its leading position. Commodities accounted for one fourth of Indonesia's Gross Domestic Product (GDP) and more than one fifth of total government revenue in 2007. The potential for further commodity growth is considerable. Indonesia is the largest producer of palm oil in the world (export earnings totaled almost US$9 billion in 2007 and employment 3.8 million full-time jobs) and the sector has good growth prospects. It is also one of the countries with the largest mining potential in view of its second-largest copper reserves and third-largest coal and nickel reserves in the world. This report consists of seven chapters. The first six chapters present an examination and an analysis of the factors driving increased commodity prices, price forecasts, economic impact of commodity price increases, effective price stabilization policies, and insights from Indonesia's past growth experience. The final chapter draws on the findings of the previous chapters and suggests a development strategy for Indonesia in the context of high commodity prices. This section summarizes the contents of the chapters and their main findings.
  • Publication
    China's New Trade Issues in The Post-WTO Accession Era
    (World Bank, 2010-01-01) World Bank
    The past eight years witnessed China's phenomenal growth and integration into the world economy, expedited by its accession to the World Trade Organization (WTO) in 2001. The accession greatly accelerated China's domestic reforms. By the end of 2007, China was ranked the second largest exporter and third largest trader in the world after its exports grew at over 20 percent per year for the sixth year in a row. The increasing competitiveness of China has been driving the efficiency of production, innovation and growth of global exports to new heights. Regional production networks in East Asia grew substantially in the past few years and were largely centered on China. This volume aims to help guide policymakers in assessing the second generation trade issues and their development impact on China by presenting lessons from other countries and policy options. Trade is a strategic area in which the World Bank has been working closely with China with the aim to promote the country's participation in the multinational economic institutions, to reduce its barriers to trade and investment, and to involve it more in global development and cross-border learning initiatives. This volume would not have been possible without collaboration with the Chinese Ministries of Finance, Commerce, and Agriculture. It has also incorporated valuable contributions from Chinese researchers in the trade area. Studies in this collection have been disseminated in a series of workshops and learning events co-organized by the World Bank and the Chinese counterparts in Beijing, which served as a forum for policy dialogue among the Chinese policy makers, trade negotiators, and scholars from development and international perspectives.
  • Publication
    China in Regional Trade Agreements : Environment Provisions
    (World Bank, 2009-06-30) World Bank
    This report is structured in three volumes: competition provisions; environment provisions; and labor mobility provisions. The main messages of this three volumes are as follows: 1) competition laws and policies are increasingly being established at the regional level, as they could be instrumental in supporting the benefits of trade and investment liberalization; 2) China may want to use the opportunity of these negotiations to: (a) further discipline its state-owned enterprises;(b) carefully consider the possible role of antidumping policies; and (c) promote and lock-in domestic reforms aimed at improving its domestic competition policies; 3) with a shift of the development agenda from primarily pursuing growth to achieving a more balanced and sustainable development and taking into account China's high reliance on trade, it may be increasingly in China's interest to pro-actively engage its partners on environmental issues in its regional trade agreement (RTA) negotiations; and 4) while the world economy stands to gain massively from liberalization in the mobility of labor, adverse popular reaction to the economic and social impacts of immigrants has kept progress in enhancing global labor mobility well below progress in trade and capital liberalization.
  • Publication
    China in Regional Trade Agreements : Competition Provisions
    (World Bank, 2009-06-30) World Bank
    This report is structured in three volumes: competition provisions; environment provisions; and labor mobility provisions. The main messages of this three volumes are as follows: 1) competition laws and policies are increasingly being established at the regional level, as they could be instrumental in supporting the benefits of trade and investment liberalization; 2) China may want to use the opportunity of these negotiations to: (a) further discipline its state-owned enterprises;(b) carefully consider the possible role of antidumping policies; and (c) promote and lock-in domestic reforms aimed at improving its domestic competition policies; 3) with a shift of the development agenda from primarily pursuing growth to achieving a more balanced and sustainable development and taking into account China's high reliance on trade, it may be increasingly in China's interest to pro-actively engage its partners on environmental issues in its regional trade agreement (RTA) negotiations; and 4) while the world economy stands to gain massively from liberalization in the mobility of labor, adverse popular reaction to the economic and social impacts of immigrants has kept progress in enhancing global labor mobility well below progress in trade and capital liberalization.
  • Publication
    China in Regional Trade Agreements : Labor Mobility Provisions
    (World Bank, 2009-06-30) World Bank
    This report is structured in three volumes: competition provisions; environment provisions; and labor mobility provisions. The main messages of this three volumes are as follows: 1) competition laws and policies are increasingly being established at the regional level, as they could be instrumental in supporting the benefits of trade and investment liberalization; 2) China may want to use the opportunity of these negotiations to: (a) further discipline its state-owned enterprises;(b) carefully consider the possible role of antidumping policies; and (c) promote and lock-in domestic reforms aimed at improving its domestic competition policies; 3) with a shift of the development agenda from primarily pursuing growth to achieving a more balanced and sustainable development and taking into account China's high reliance on trade, it may be increasingly in China's interest to pro-actively engage its partners on environmental issues in its regional trade agreement (RTA) negotiations; and 4) while the world economy stands to gain massively from liberalization in the mobility of labor, adverse popular reaction to the economic and social impacts of immigrants has kept progress in enhancing global labor mobility well below progress in trade and capital liberalization.
  • Publication
    Sovereign Wealth Funds in East Asia
    (Washington, DC, 2008-06-30) World Bank
    The massive size, rapid growth, and high-profile investments of Sovereign Wealth Funds (SWFs) in the U.S. and elsewhere in 2007 has attracted the attention of the media, politicians, regulators, and academics over the past year. Some of the SWF investments have been viewed as market stabilizing, for instance the substantial equity investments in large U.S. financial institutions that were recently in financial trouble after the sub-prime mortgage crisis. However, there is great suspicion from many political and academic quarters that SWFs are politically motivated with many SWFs in Asia now at the center of the storm. Although SWFs have been in existence for many decades worldwide, most SWFs in the East Asia and Pacific Region (EAP) are relatively new. The emergence of the SWFs in Asia is largely a by-product of the strong economic development at East Asian countries and the attendant accumulation of foreign exchange reserves, however, there are other types of SWFs in the region. The Governments have taken a concerted strategy to enhance the returns on these excess reserves. The EAP region is an ideal region to take a look at the issues surrounding SWFs since Asia has the full range of funds from long-established funds to brand new funds; from passive portfolio investors to more aggressive strategic investors; from resource-backed funds to foreign reserve-backed funds; and, based in the largest, most highly developed economies to the smallest, poorest economies in Asia. Therefore, the objective of this report is to document the status of Sovereign Wealth Funds in the East Asia Region and to understand the implications of their rapid growth. Many developing countries have recently shifted a higher proportion of their foreign currency earnings from official foreign currency reserves to sovereign wealth funds. Sovereign wealth funds have an estimated $600 billion in assets under management in developing countries, dominated by China ($200 billion held by the Chinese Investment Corporation and $68 billion held by the Central Huijin Investment Company) and Russia ($130 billion held in the Reserve Fund and $33 billion held by the Fund of Future Generations). It should be noted that this amount is small relative to the total level of reserves held by developing countries (estimated at $3.7 trillion at end 2007).
  • Publication
    Building Export Competitiveness in Laos : Summary Report
    (World Bank, Washington, DC, 2006-11) World Bank
    The basic framework for the background study on building export competitiveness in Laos is based on the National Growth and Poverty Eradication Strategy (NGPES), which appropriately stresses the need to: (i) improve the business climate by creating a predictable and transparent policy environment; (ii) streamline administrative procedures and regulations that are an obstacle to domestic and foreign private investment; and (iii) strengthen market institutions, including most notably those related to dispute resolution and contract enforcement. This paper focuses on three key priority areas: (a) Strengthening fiscal management is a first priority area. Progress in strengthening fiscal management is likely to require reforms to the broader framework of center-province fiscal relations; (b) Establishing a functioning banking system is a second priority area. Laos needs an efficient banking system to achieve the government's development goals and meet the competitive challenges of regional integration; and (3) Improving competitiveness is a third priority area. Conventional macroeconomic assessments of competitiveness using real effective exchange rates do not suggest any major competitiveness concerns. Other approaches, involving a more detailed assessment of the various elements that make up the investment climate, suggest that competitiveness is a major impediment to attracting investment to Laos. This study addresses the main elements of the reform agenda to strengthen Laos' competitiveness, placing special emphasis on trade facilitation and reforms to the business environment.
  • Publication
    From Goats to Coats : Institutional Reform in Mongolia's Cashmere Sector
    (Washington, DC, 2003-12-19) World Bank
    The Mongolian cashmere industry has experienced a series of booms and busts over the last decade. Unsatisfactory public sector policies contributed to this result. External factors such as the unfavorable economic environment of the early 1990s, the East Asia crisis, and weather conditions have also affected its performance. Over 1993-96 cashmere exports doubled from US$33.5 million to US$71.2 million, as cashmere's share in exports increased from 9.2 to 16.8 percent. Cashmere exports weakened in 1997 and 1998, recovered briefly in 1999-2000, and faltered again in 2002 to US$45.2 million, below their 1996 levels. Cashmere's share in exports fell from 16.8 to 8.6 percent over 1996-2002. Within this background, the report examines the industry's five principal shortcomings: supply distortions; decreasing cashmere quality, demand imperfections, inadequate marketing and distribution systems, and poor public and private institutional capacity to guide industrial policy development. The lack of an efficient public sector to provide public goods, inadequate strategic business development policies, and unregulated and outdated production patterns have stifled competition, and prevented the industry from reaching its potential. Mongolia's cashmere industry has moved only marginally up the value-added chain beyond primary production, leaving it especially vulnerable to changes in market demand. It also examines Mongolia's current legal and administrative mechanisms for regulating grazing land - poorly understood by central and local governments that also frequently lack the capacity to implement the laws. The 1995 Land Law gave local governments broad authority to regulate grazing. With clarification of their legal mandates and capacity-building interventions, local governments, perhaps in partnership with local herding associations, would be capable of regulating pasture use. This paper examines the structure, conduct, and organization of Mongolia's cashmere industry and discusses the strategic supply chain linkages needed to improve its production, marketing, and competitiveness. The paper looks at how agents along the cashmere industry supply chain can generate collective efficiencies and gain competitive advantages by deepening collaboration. It also examines how public policy affects industry and firm decisions on cashmere production and marketing systems, and the incomes of herders and rural communities. It suggests a set of actions and policies for the private and public sectors - including the donor community - to facilitate cashmere's transition to a truly competitive industry. Highlighted are existing initiatives to improve market coordination, and generate cost savings, and propose areas for expansion.