Foreign Trade, FDI, and Capital Flows Study

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  • Publication
    Evaluation of the EU-Turkey Customs Union
    (Washington, DC, 2014-03-28) World Bank
    The implementation of the customs union (CU) in 1995 was the culmination of thirty-two years of association between the European Union (EU) and Turkey and was expected by Turkey to be the first step in the EU accession process. The CU has been a major instrument of integration for the Turkish economy into both European and global markets. The CU covers trade in just industrial goods (including the industrial components of processed agricultural products) and excludes primary agriculture, services, and public procurement but has proved to be a powerful force of regulatory convergence. The evaluation s objectives are to assess the impacts of the CU and to make forward looking, solution-orientated recommendations for its improvement with an emphasis on the economics behind the various trade irritants and options for dealing with problems related to asymmetries as well as examining the case for widening. The evaluation provides quantitative and qualitative estimates of the effects of the CU and demonstrates that the trade agreement has been highly beneficial for both Turkey and the EU. The evaluation consists of two main parts: (i) an evaluation of the impact of the CU on trade, foreign direct investment (FDI), and more broadly, welfare in Turkey through the effects it has had on trade policy, eliminating the need for rules of origin (ROOs) on preferential trade with the EU and implementing the acquis in areas covered by the CU; and (ii) a review of current limitations of the existing trade arrangement, potential gains in dealing with these as well as modalities for reform. The evaluation has six sections. Section one gives introduction. Section two reviews trade and investment outcomes between the EU and Turkey. Section three examines the effects the CU has had on the trade policy environment for Turkey. Section four provides an overview of EU-Turkey trade relations in terms of Turkey s harmonization with EU regulations and use of trade defense instruments. The fifth section examines the potential impacts of widening the trade arrangement to cover new areas in agriculture and services and makes proposals for the modalities that can be used to include these as part of an agreement including in the context of full accession. Section six presents conclusions and recommendations.
  • Publication
    Republic of Malawi Diagnostic Trade Integration Study Update : Reducing Trade Costs to Promote Competitiveness and Inclusive Growth
    (Washington, DC, 2014-03-25) World Bank
    The diagnostic trade integration study (DTIS) update identifies the trade related constraints holding back Malawi from diversifying and deepening its production base, and increasing trade. The DTIS update identifies and quantifies specific trade costs that determine the availability and price of inputs and the ability of producers to get their products to regional and international markets. The report focuses on tariff policies, regulatory issues impacting on trade, trade facilitation and logistics, and policies affecting agricultural trade and trade in services. Recognizing that the (enhanced) integrated framework and the DTIS (including the 2003 DTIS for Malawi) have not been effective in addressing many of the broader issues requiring large-scale physical investments in most countries, this DTIS update focuses on specific trade related policy and regulatory issues within the mandate and policy space of the ministry of trade and the national implementation unit or similar implementation mechanisms. In this context, the report is structured as follows: chapter one gives introduction. Chapter two outlines the current macroeconomic position and the level of trade openness, summarizes the status of the business enabling environment. Chapter three describes Malawi's current trade policy with a detailed review of the existing tariff schedules. Chapter four addresses a range of the key regulatory issues that raise costs for all producers in Malawi. Chapter five looks in depth at how the trade and regulatory policies within the agricultural sector impact on competitiveness. Finally, chapter six addresses the important issues of trade in services through focusing on professional services such as engineering, accounting, and law.
  • Publication
    Estimating Trade Flows, Describing Trade Relationships, and Identifying Barriers to Cross-Border Trade Between Cameroon and Nigeria
    (Washington, DC, 2013-05-07) World Bank
    Cameroon and Nigeria share a common border of nearly 1,700km and both countries have strong historical and cultural ties. However, the partnership between the two countries has had its difficult periods, most recently when the relationship turned hostile over the disputed Bakassi Peninsula, and economic linkages between the economies remain limited. Expanding trade between the two countries could play a critical role in accelerating economic development and regional integration by opening up new markets for producers, and allowing them to benefit from economies of scale. This will require reducing barriers to cross-border trade, allowing increased trade flows to reach the larger market, and permitting private sector producers to increase the scale of their activities. Removing barriers to trade between the two neighbors is likely to benefit particularly relatively remote areas of both countries. The study finds that regulatory and security barriers at the border and along the road remain key impediments to trade. The remainder of this report proceeds as follows. Section one describes drivers for cross border trade such as historical relations, economic factors, and the policy environment. The next section describes the reality of trade flows by describing existing trade corridors and estimating current trade flows. Section three describes how goods are actually traded across borders between the two countries, and how different actors are involved. Section four describes the barriers to trade, and identifies which barriers are most important. Section five describes the potential for increasing trade. Section six summarizes the findings and presents prioritized recommendations for policy reform.
  • Publication
    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.
  • Publication
    Congo, Democratic Republic of - Enhanced Integration Framework Program (EIF) : diagnostic trade integration study
    (World Bank, 2010-07-01) World Bank
    The goal of the Congo, Democratic Republic of (DRC's) trade policy is to create a regulatory, fiscal and institutional environment in which domestic and foreign trade can develop unhindered, opening up the country's vast territory and integrating it into regional and international trade channels. In this respect, the analyses in this report highlight three priorities: (i) to streamline and reduce port taxation; (ii) to conclude the negotiations on a future Economic Partnership Agreement (EPA) with the European Union (EU); and (iii) to move ahead with regional integration with the DRC's natural partners. The identification of these priorities is based on the diagnosis of the DRC's macroeconomic and trade performance and the implications of its choices in terms of trade policy Although it is sometimes said that natural resources are 'a curse' when referring to the disappointing performance of many commodity-exporting countries, work carried out recently has .shown that an abundance of natural resources is not, in itself, a factor inhibiting growth. What is important for the DRC and for all other commodity-exporting countries is to put in place an environment that is beneficial for all sectors of the economy, in which all people and sectors have access to factors of production in a competitive environment where the rule of law is respected. A stable macroeconomic environment is the essential prerequisite for efficient markets. The Congolese economy, however, has recently been subject to considerable pressures. During the last quarter of 2008, commodity prices temporarily collapsed. In addition, disturbances in the Eastern provinces led the Government to increase spending on national defence, financing this through a loan from the Central Bank. This unrest led to market fears concerning the stability of the Congolese franc, helping to cause its depreciation. The authorities' response in terms of macroeconomic policy has been ambiguous, particularly as regards monetary policy. This report is divided into five chapters: implementation and recommendations; trade performance and the policy in the DRC; trade facilitation; performance of sectors upstream: infrastructure and services; and performance of sectors downstream: mining, agriculture, and forestry.
  • Publication
    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.
  • Publication
    The Gambia - From Entrepot to Exporter and Eco-tourism : Diagnostic Trade Integration Study for the Integrated Framework for Trade-related Technical Assistance to Least Developed Countries
    (Washington, DC, 2007-07) World Bank
    For decades, Gambia has served as a regional entrepot, using the river as a transportation link to the hinterland. Relatively low import taxes, well-functioning port and customs services, and limited administrative barriers reinforced Gambia's position as a trading center. About 80 percent of Gambian merchandise exports consist of re-exports to the sub-region goods imported into Gambia are transported unofficially into Senegal and beyond. Gambian economy and especially its public finances are highly dependent on this trade because imported goods destined for re-export pay the normal import duties. Recently, however, re-exports have declined due to a combination of tensions with Senegal, harmonization of import and sales taxes in the region, and improved port and customs operations in Senegal and other neighboring countries. The current re-export trade is unlikely to be sustainable, calling for a strategy to build growth on a more secure foundation. The report identifies directions for establishing a more sustainable foundation for the country's position as a gateway to the region by improving the transport system and reinforcing its efficient trade facilitation services, while recognizing the limited potential for growth. The study makes detailed recommendations on strengthening and diversifying domestic production of goods and services in the areas of tourism, groundnuts, other agriculture, and fishing, by improving the business climate as well as implementing sector-specific reforms.
  • Publication
    Kenya : Unleashing the Potential for Trade and Growth
    (Washington, DC, 2007-02) World Bank
    There is tremendous potential for trade to play a key role in driving and sustaining growth and poverty reduction in Kenya. There is significant potential for greater participation in international markets to support growth and poverty reduction. Kenya has had some notable achievements: in cut flowers and fresh vegetables. This report assesses Kenya's trade performance, and identifies key domestic constraints to its further integration into the global economy. Furthermore, the report advances a set of recommendations to tackle these constraints, with a focus on how trade can contribute to growth and poverty reduction in the country. Specifically, the report aims to support the Government o f Kenya (GOK) to: realize its Investment Program for the Economic Recovery Strategy for Wealth and Employment Creation 2003-2007 (IP-ERS), to implement its National Export Strategy (NES); to implement its Private Sector Development strategy and formulate a trade-policy strategy.
  • 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
    Angola : Diagnostic Trade Integration Study
    (Washington, DC, 2006-09) World Bank
    The primary goal of this Diagnostic Trade Integration Study (DTIS) is to provide a plan for reactivating Angola's productive sectors that reduces the country's reliance on imports while enabling the restoration of export capacity in the medium to long term. Executing such a plan will involve investing in the rehabilitation of infrastructure destroyed by war and making and adjusting policies that affect the institutional underpinnings of a market economy, as well as incentives for exporting and importing. This goal is inextricably linked with the overriding need to create jobs and alleviate poverty identified in the government of Angola's long-term poverty reduction plan, the Estrategia de Combate a Pobreza (ECP).