Journal Issue: World Bank Economic Review, Volume 24, Issue 3

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Formulas and Flexibility in Trade Negotiations : Sensitive Agricultural Products in the World Trade Organization's Doha Agenda
(World Bank, 2011-03-30) Jean, Sébastien ; Laborde, David ; Martin, Will
Many trade negotiations involve large cuts in high tariffs, while allowing smaller cuts for an agreed share of politically sensitive products. The effects of these flexibilities on market access opportunities are difficult to predict, creating particular problems for developing countries in assessing whether to support a proposed trade agreement. Some widely used ad hoc approaches for identifying likely sensitive products—such as the highest-bound-tariff rule—suggest that the impact of a limited number of such exceptions on average tariffs and market access is likely to be minor. Applying a rigorous specification based on the apparent objectives of policymakers in setting the prenegotiation tariff enables more accurate assessment of the implications of sensitive-product provisions for average agricultural tariffs, economic welfare, and market access under the Doha negotiations. The analysis concludes that highest-tariff rules are likely to seriously underestimate the impacts on average tariffs and that treating even 2 percent of tariff lines as sensitive is likely to have a sharply adverse impact on economic welfare. The impacts on market access are also adverse, but much smaller, perhaps reflecting the mercantilist focus of the negotiating process.
What Explains the Low Survival Rate of Developing Country Export Flows?
(World Bank, 2011-03-30) Brenton, Paul ; Saborowski, Christian ; von Uexkull, Erik
Successful export growth and diversification require not only entry into new export products and markets but also the survival and growth of export flows. For a cross-country dataset of product-level bilateral export flows, exporting is found to be a perilous activity, especially in low-income countries. Unobserved individual heterogeneity in product-level export flow data prevails even when a wide range of observed country and product characteristics are controlled for. This questions previous studies that used the Cox proportional hazards model to analyze export survival. Following Meyer (1990), a Prentice-Gloeckler (1978) model is estimated, amended with a gamma mixture distribution summarizing unobserved individual heterogeneity. The empirical results confirm the significance of a range of product- as well as country-specific factors in determining the survival of new export flows. Important for policymaking is the finding of the value of learning-by-doing for export survival: experience with exporting the same product to other markets or different products to the same market is found to strongly increase the chance of export survival. A better understanding of such learning effects could substantially improve the effectiveness of export promotion strategies.
Stop! The Polio Vaccination Cessation Game
(World Bank, 2011-03-30) Barrett, Scott
Should polio be eradicated worldwide, countries must decide whether to continue to vaccinate with the live-attenuated vaccine, to continue to vaccinate with the alternative, killed vaccine, or to cease vaccinating. To reap a dividend from polio eradication, countries must choose the last option, but vaccination cessation entails interdependent risks as well as rewards. This article models the polio vaccination cessation game, deriving the conditions that support vaccination cessation as an equilibrium, describing the policies and institutions needed to steer countries toward this equilibrium, and presenting crude quantitative estimates of the gains to supporting this equilibrium.
After Janjaweed? Socioeconomic Impacts of the Conflict in Darfur
(World Bank, 2011-03-30) Olsson, Ola
This article uses a unique database on 542 villages in southwestern Darfur to analyze patterns of land reallocation and population change that have emerged as a consequence of the recent conflict. The analysis demonstrates that a displacement from this region alone of more than 300,000 people from three targeted African groups has occurred and that villages have been repopulated by Arab and other African groups. Almost a fourth of all villages have been squatted by newly settled populations. The probability of squatting is shown to be largest in peripheral areas with good access to surface water, where soils are of good quality, and where many households from targeted tribes previously lived. A key challenge for postconflict reconstruction will therefore be the restoration of rights to land.
Micro-Level Estimation of Child Undernutrition Indicators in Cambodia
(World Bank, 2011-03-30) Fujii, Tomoki
One major limitation to addressing child undernutrition is a lack of the information required to target resources. This article extends the small-area estimation technique of Elbers, Lanjouw, and Lanjouw (2002, 2003) to jointly estimate multiple equations while allowing for individual-specific random errors across equations (in addition to cluster- and household-specific random errors). Estimates of the prevalence of stunting and underweight for children under age 5 in Cambodia from 17 Demographic and Health Survey strata are disaggregated into 1,594 communes by combining the Demographic and Health Survey data. The estimates are consistent with the survey-only estimates at the aggregate and primary sampling unit levels. The accuracy of the commune-level estimates is comparable to the survey-only estimates at the stratum level. The results are robust, and the estimates are useful for policy analysis and formulation. The small-area estimates can be presented in various ways. The strengths of each representation are also discussed.
Substitutability and Protectionism : Latin America's Trade Policy and Imports from China and India
(World Bank, 2011-03-30) Facchini, Giovanni ; Olarreaga, Marcelo ; Silva, Peri ; Willmann, Gerald
This article examines the trade policy response of Latin American governments to the rapid growth of Chinese and Indian exports in world markets. To explain more protection in sectors where a large share of imports originates in China and India, the “protection for sale” model is extended to allow for region-specific degrees of substitutability between domestic and imported varieties of a good. The results suggest that more protection toward Chinese and Indian goods can be explained by the higher substitutability of Chinese and Indian goods with domestic varieties. The data support the model, which performs better than the original protection for sale framework in explaining Latin America's structure of protection.
Liberalization, Endogenous Institutions, and Growth : A Comparative Analysis of Agricultural Reforms in Africa, Asia, and Europe
(World Bank, 2011-03-30) Swinnen, Johan F.M. ; Vandeplas, Anneleen ; Maertens, Miet
Thirty years ago, a vast share of low- and middle-income countries was heavily state controlled. The liberalizations of the 1980s and 1990s had greatly different effects on growth in countries in Africa, Asia, and Europe. A comparative framework is used to document these differences, and a model is developed to formally analyze how liberalization affects production and income distribution when the institutions that govern production and exchange are also affected. Hypotheses are derived for how endogenous institutional adjustments affect the growth response to liberalization. These insights motivate a series of explanations for the differences in performance across regions and commodities following liberalization.