Journal Issue: World Bank Economic Review, Volume 20, Issue 2
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Volume
20
Number
2
Issue Date
Journal Title
Journal ISSN
1564-698X
Journal
World Bank Economic Review
1564-698X
Journal Volume
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Articles
Doha Merchandise Trade Reform : What is at Stake for Developing Countries?
(Oxford University Press on behalf of the World Bank, 2006-05-01) van der Mensbrugghe, Dominique; Anderson, Kym; Martin, Will
This article: a) summarizes the costs of
current merchandise trade distortions to developing and
other economies; b) examines some scenarios that might
emerge as part of an eventual Doha agreement consistent with
the 2005 Hong Kong Ministerial declaration, particularly
with respect to agriculture; and c) draws implications for
the strategies developing countries might adopt in the World
Trade Organization's (WTO's) Doha round of
multilateral trade negotiations. This article estimates what
the world economy might look like in 2015 without and with a
successful conclusion to the Doha round, how far Doha could
take the world toward an outcome with no distortions in
merchandise trade, and what contribution various elements of
a Doha package could make.
Price Effects of Preferential Market Access : Caribbean Basin Initiative and the Apparel Sector
(Oxford University Press on behalf of the World Bank, 2006-05-01) Sharma, Gunjan; Özden, Çaglar
Preferential trade arrangements should
be evaluated by their effect on prices rather than by their
effect on the total value of trade. This point is emphasized
in the theoretical literature but rarely implemented
empirically. This article analyzes the U.S. Caribbean Basin
Initiative's (CBI's) impact on the prices received
by eligible apparel exporters. The CBI's apparel
preferences are the most important and heavily used
unilateral preferences because of high trade barriers
imposed on exports from the rest of the world. A fixed
effect generalized least squares (GLS) estimation is used to
isolate the effects of other factors (such as quality,
exchange rates, and transaction costs) and to identify the
effects of tariff preferences. CBI exporters capture only
about two-thirds of their preference margin despite the high
degree of competition among importers. This translates into
a 9 percent increase in the relative prices they receive,
with some variance across countries and years. Countries
specializing in higher value items capture more of the
preference margin, and the implementation of the North
American Free Trade Agreement (NAFTA) has a negative effect.
Removing multifibre arrangement quotas significantly lowers
the benefits of CBI preferences.
Preference Erosion and Multilateral Trade Liberalization
(Oxford University Press on behalf of the World Bank, 2006-05-22) Francois, Joseph; Hoekman, Bernard; Manchin, Miriam
Because of concern that tariff
reductions in Organization for Economic Co-operation and
Development (OECD) countries will translate into worsening
export performance for the least developed countries, the
erosion of trade preferences may become a stumbling block
for multilateral trade liberalization. An econometric
analysis of actual preference use shows that preferences are
underused because of administrative burdens-estimated to be
equivalent to an average of four percent of the value of
goods traded. To quantify the maximum scope for preference
erosion, the compliance cost estimates are used in a
model-based assessment of the impact of full elimination of
OECD tariffs. Taking into account administrative costs
eliminates erosion costs in the aggregate and greatly
reduces the losses for countries most affected by preference erosion.
Development : A Study of the Indian Manufacturing Industry
(Oxford University Press on behalf of the World Bank, 2006-05-04) Hulten, Charles; Bennathan, Esra; Srinivasan, Sylaja
If infrastructure tends to generate
spillover externalities, as has been the assumption in much
of the development literature, one may reasonably look for
evidence of such indirect effects in the accounts of
manufacturing industries. Empirical support for this
assumption has so far been ambiguous. This analysis of
Indian data, however, reveals substantial externality
effects from the states' infrastructure to
manufacturing productivity. The analysis separates the
direct effects of roads and electricity, as mediated by the
infrastructure services purchased by manufacturing
industries along with other intermediate inputs, from the
indirect effects, as measured by the impact of
infrastructure capacity on the Solow productivity residual.
In the 20 years from 1972 to 1992, growth of road and
electricity-generating capacity seems to have accounted for
nearly half the growth of the productivity residual of
India's registered manufacturing.
Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization
(Oxford University Press on behalf of the World Bank, 2006-05-17) Limão, Nuno; Olarreaga, Marcelo
The proliferation of preferential trade
liberalization over the last 20 years has raised the
question of whether it slows multilateral trade
liberalization. Recent theoretical and empirical evidence
indicates that this is the case even for unilateral
preferences that developed countries provide to small and
poor countries, but there is no estimate of the resulting
welfare costs. This stumbling block effect can be avoided by
replacing the unilateral preferences with a fixed import
subsidy, which generates a Pareto improvement. More
importantly, this paper presents the first estimates of the
welfare cost of preferential liberalization as a stumbling
block to multilateral liberalization. Recent estimates of
the stumbling block effect of preferences with data for 170
countries and more than 5,000 products are used to calculate
the welfare effects of the European Union, Japan, and the
United States switching from unilateral preferences for
least developed countries to an import subsidy scheme. In a
model with no dynamic gains to trade, the switch produces an
annual net welfare gain for the 170 countries that adds
about 10 percent to the estimated trade liberalization gains
in the Doha Round. It also generates gains for each group:
the European Union, Japan, and the United States ($2,934
million), least developed countries ($520 million), and the
rest of the world ($900 million).
Aid and the Supply Side : Public Investment, Export Performance, and Dutch Disease in Low-Income Countries
(Oxford University Press on behalf of the World Bank, 2006-05-17) Adam, Christopher S.; Bevan, David L.
Contemporary policy debates on the
macroeconomics of aid often concentrate on short-run Dutch
disease effects, ignoring the possible supply-side impact of
aid financed public expenditure. In the simple model of aid
and public expenditure presented here, public infrastructure
generates an inter-temporal productivity spillover, which
may exhibit a sector-specific bias. The model also provides
for a learning-by-doing externality, through which total
factor productivity in the tradable sector is an increasing
function of past export volumes. An extended computable
version of this model is used to simulate the effect of a
step increase in net aid flows. The simulations show that
beyond the short run, when conventional demand-side Dutch
disease effects are present, the relationship between
enhanced aid flows and real exchange rates, output growth,
and welfare is less straightforward than simple models of
aid suggest. Public infrastructure investment that generates
a productivity bias in favor of non-tradable production
delivers the largest aggregate return to aid, but at the
cost of deterioration in the income distribution. Income
gains accrue predominantly to skilled and unskilled urban
households, leaving the rural poor relatively worse off.
Under plausible parameterizations of the model, the rural
poor may also be worse off in absolute terms.
The Doha Round and Preference Erosion : A Symposium
(Oxford University Press on behalf of the World Bank, 2006-05-12) Hoekman, Bernard
The trade and welfare impacts of
multilateral liberalization on individual countries and
groups within countries depend on many factors-including the
depth of liberalization by trading partners, the extent of
countries' own reforms, the responsiveness of investors
to changes in relative prices and market opportunities, and
actions by governments to reduce real trade costs. The
magnitude of erosion will depend on a variety of factors,
including the product and country coverage of preferential
schemes, the level of most favored nation restrictions in
the markets granting preferential access, the administrative
costs associated with using preference programs, the
incidence of any preference rents, the depth of
liberalization realized in Doha, and the existence of and
changes in reciprocal trade agreements. Moreover, the value
of preferences is better measured by income earned-what
matters is the impact on the price actually received by the
exporters because the pass-through of preferential access is
likely to be incomplete.