2014-05, Taglioni, Daria, Winkler, Deborah

Global value chains (GVCs) are playing an increasingly important role in business strategies, which has profoundly changed international trade and development paradigms. GVCs now represent a new path for development by helping developing countries accelerate industrialization and the servicification of the economy. From a firm perspective, production in the context of GVCs highlights the importance of being able to seamlessly connect factories across borders, as well as protect assets such as intellectual property. From the policy maker perspective, the focus is on shifting and improving access to resources while also advancing development goals, and also on the question of whether entry into GVCs delivers labor-market-enhancing outcomes for workers at home, as well as social upgrading. GVCs can lead to development, but, at the country level, constraints such as the supply of various types of labor and skills and inadequate absorptive capacity remain. GVCs can create new opportunities on the labor demand side, but supply and demand cannot meet if the supply is missing. This potential gap illustrates the importance of embedding national GVC policies into a broader portfolio of policies aimed at upgrading skills, physical and regulatory infrastructure, and enhancing social cohesion.

2013-01, Reis, José Guilherme, Taglioni, Daria

As globalization progresses and investment is mobile, it is ever more important for policy makers to understand drivers of growth and exports at the micro-level: Which products are being produced and exported? Which firms populate the domestic economy? Are they successful in exporting? How are firms affected by exogenous shocks and policy intervention? Through the use of descriptive statistics and econometric analysis, this paper assesses the trade competitiveness of Pakistan using micro-data. The case of Pakistan is interesting since the country's recent trade policy has reverted to a protectionist path since the mid-2000s and trade performance is stagnating, as indicated by a decrease in its trade-to-gross domestic product ratio over the past decade and low levels of sophistication of exports. The main findings of the paper are the following. Like many other countries, Pakistan posts a high concentration of exports in the hands of a limited number of large exporters. The dominance of few exporters has increased over time and it seems associated with the changes in trade policy. Low rates of product innovation and experimentation and a low ability of the Pakistani export sector to enter into new higher growth sectors are other features emerging from the data. All in all, the mediocre performance seems to be associated with internal problems with trade-related incentives, business environment, and governance, in addition to the well-known external constraints.

2013-04, Cattaneo, O., Gereffi, G., Miroudot, S., Taglioni, D.

In recent years, global value chains have played an increasing role in business strategies, profoundly affecting international trade and development paradigms. Global value chains now represent a major source of socio-upgrading opportunities and a new path for development. Trade, competitiveness and development policies should be reshaped accordingly to seize these opportunities and avoid the risks associated with greater participation in global value chains. This paper provides a framework and analytical tools for measuring and improving a country's performance with respect to participation in global value chains. With a clear operational focus, it provides guidance for countries willing to join, maintain participation, and/or move up global value chains. With the ultimate objective to increase the value (the development content) for trade, it also offers strategies to maximize the benefits and minimize the risks of developing countries' participation in global value chains.

2013-12, Gaulier, Guillaume, Santoni, Gianluca, Taglioni, Daria, Zignago, Soledad

Over the past two decades, international trade has become a privileged engine of growth for much of the developing world. With the global economy evolving continuously and rapidly, countries must pay close attention to their positioning on the map of global trade and production. Within this framework, countries must also become aware of how they fare relative to competitors and to their past export performance. Of particular importance is the extent to which their performance is driven by exporter own supply-side capacity as opposed to external or compositional factors, including product and geographical specialization and how these trends compare across countries. This paper describes a new initiative that uses quarterly data for 2005q1-2013q1 to compute comparable indicators of export performance for 228 countries and territories. The database, the Export Competitiveness Database, reveals interesting patterns in trade performance. Export performance, stripped of compositional effects, was strongest for countries from the Asia and Pacific region, on average. Moreover, such performance was almost entirely driven by exporting country specific factors, with changes reflecting growth in volume rather than price developments. All emerging and developing regions have, on average, improved export performance. The indicators in the database trace the legacy of supply-side capacity and the overall export performance of the double-dip recession in the euro area. An illustrative set of results suggests that the paper's measure of competitiveness correlates to a country's nominal and real effective exchange rate, factors that are commonly perceived as important determinants of competitiveness.

2012-10, Zavacka, Veronika, Taglioni, Daria

The failure of trade economists to anticipate the extreme drop in trade post Lehman Brothers bankruptcy suggests that the behavior of trade in exceptional circumstances may still be poorly understood. This paper explores whether uncertainty shocks have explanatory power for movements in trade. VAR estimations on United States data suggest that domestic uncertainty is a strong predictor of movements in imports, but has little effect on exports. Guided by these results, the paper estimates a bilateral model with focus on the impact of importer uncertainty on foreign suppliers. It finds that there is a strong negative relationship between uncertainty and trade and that this relationship is non-linear. Uncertainty matters most when its levels are exceptionally high. The paper does not find evidence of learning from past turmoils, suggesting that prior experience with major uncertainty shocks does not reduce the effect on trade. In line with the expectations, the negative effect of uncertainty shocks on trade is higher for trade relationships more intensive in durable goods. Surprisingly, however, the effect of durability is non-linear. Supply chain considerations or the possibility that the relationships with the highest durability lead to important compositional effects may have a bearing on the results. The results are robust to excluding the post Lehman shock, suggesting that the trade response during the 2008-2009 crisis has been similar to past uncertainty events.

2013-03, Reis, José Guilherme, Taglioni, Daria

This paper reviews Pakistan's recent trade performance, its trade policy and trade costs. Different dimensions of trade performance growth and orientation, diversification and sophistication are assessed, complemented by an in-depth analysis of export dynamics in the period 2001-10 using firm-level data. An econometric exercise is also performed to identify the impact of tariffs, exchange rates, fixed costs to export, foreign demand, and preferential trade policy on the ability of firms to increase their exports. The analysis of Pakistan's trade policy includes tariffs, effective protection and trade restrictiveness estimates, as well as an assessment of the role of preferential trade agreements in the context of regional integration. Finally, the main characteristics of trade facilitation and logistics are analyzed, covering the capacity, performance, quality of services and degree of integration of the logistics system.